Razorpay's Harshil Mathur says user-specific fintech will be next big focus area

Razorpay's Harshil Mathur is of the opinion that a second wave of fintech is imminent, and it'll focus on solving more complex aspects of finance.

While the first wave of fintech was all about solving the easiest problems of the system--making digital payments, or investing via digital platforms--the second will solve more complex problems, such as tailor-made insurance solutions that reward good behaviour.

Personalised solutions are a big white space in the fintech industry currently, Harshil says, adding innovative solutions that cater to users' specific needs after comprehensively understanding their financial health, profile, and history can prove to be valuable.

Another area where fintech hasn't penetrated too meaningfully is B2B finance, i.e. fintech startups that provide tech-led solutions to other businesses, Harshil said. For example, platforms that help businesses invest their idle monies, or helps create virtual, short-term usage expense cards.

"A lot of fintech has happened in the last five years, and there'll be a lot more happening in the next 10 years," said Harshil, at the 13th edition of YourStory's TechSparks 2022 event.

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No right way to build

On being asked whether he believes startups should chase external capital or bootstrap their way to growth, Harshil said, "there's no right way to build a business."

If founders have the choice to build a business by bootstrapping, they should go ahead and do that. But there are areaa, like R&D, where capital gives advantages such as rapid growth and acceleration, and then external capital provides that springboard, he said.

However, Harshil also cautioned that when founders raise VC money, they need to accept and understand that that money comes with one big caveat: "If you're raising even $1, you need to understand that you're signing up for a path to aggressive growth. If you're signing up for $100,000, you need to earn back 10X that."

If blitzscaling is something founders find exciting, there's absolutely no harm in raising VC money, Harshil concluded.

A common thread across our all our chats with startups and VCs over the three days at TechSparks was funding, and whether startups should rely on external capital as much as they do now.

Zerodha Founder Nithin Kamath said chasing valuations is a treadmill, and that sometimes, what's best for the end user may not be the best thing for an investor.

Other VCs and founders said that external capital is ultimately a debt obligation, and that diluting too much could mean working in your own company as an employee, not a founder.

Harshil, however, is of the opinion that 'to each, their own'. He only insists that founders understand what they're doing, and why they're doing it, instead of being led by FOMO (the fear of missing out).