Funding winter: IFSCA aims to award Fintech grants to Indian innovators from early next year

At a time when startups are facing ‘funding winter’, the International Financial Service Center Authority (IFSCA) will start providing Fintech grants from early next year to Indian innovators. IFSCA Chief Technology Officer Joseph Joshy said that Indian Fintechs have started applying for the IFSCA Fintech Incentive Scheme, 2022, which has six types of grants.

– We have an external committee that will look at these applications. “Probably, from early next year, the grants will start flowing,” he said on the sidelines of the Singapore Fintech Festival (SFF) held from 2-4. November 2022. The grants are for bootstrap innovators and range between Rs 15 lakh to Rs 75 lakh, Joshy said, adding that the grants are timely but not comparable to the venture capitalists’ investment sizes that run into millions of dollars. Industry observers at SFF said the funding winter, exacerbated by the US recession, will see around 50-60 per cent of start-ups, including Fintechs, facing a bleak future.

Read also| OCC to add fintech-oriented discussions for its representatives

Hopefully, the impact of this funding winter won’t be as bad as the Dot.com crash of 2001, they added. Julie Fergerson, CEO and co-founder of Seattle-based Merchant Risk Council, believes the startup network will go through a correction. “It is an industry-wide correction as some of them are overvalued,” she told PTI at SFF, referring to the funding winter, a term widely used by the industry for funds slowing down for the encouraged and promoted startups.

Read also| Fintech platform Stashfin appoints Ankit Rajpal as its Senior Vice President – ​​Engineering

However, Fergerson pointed out that startups, which provide maximum value, rose to the top faster from the previous recession. This time, VCs are going to be tough on putting dollars into any startup, thorough due diligence will be done and startups with profitable models will be considered, said a Singapore banker.

“Investors have been disappointed with some of the startups,” the banker added, speaking on condition of anonymity. Poorna Nayak, Bangalore-based co-founder of EnrichVideo, said people are already finding it difficult to raise funds and some of their startup valuations are sky-high.

“People have to tone down their expectations because funding doesn’t come easily. Investors’ focus will be on profitability from now on,” Nayak said. Market sources believe 80 percent of startups show weak models, while less than 5 percent have succeeded to some level. Startups and Fintechs that have not created a market niche for themselves will be eliminated from the competition for funds.The US recession, the trade war between the US and China, uncertainty in Europe as well as the conflict between Russia and Ukraine are already affecting global economies.