This document provides an overview of financial technology (fintech) in India. It notes that India has a large population that is young, mobile, and growing rapidly. The fintech market in India is poised for significant growth, especially in digital payments via mobile devices. Mobile banking and digital payment solutions have potential to better serve small businesses and help move India towards a more cashless society. The document outlines several trends in Indian fintech including growing smartphone and internet usage, and opportunities in areas like lending, payments, remittance, and banking technology.

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April 27, 2016
Image by Pankaj Jain
APRIL27,2016PAGE1
Introduction To Indian FinTech

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Since July 20101,500+ investments2
500 Startups Is the Most Active Seed Investor in Silicon
Valley and Aims to be Largest in the World1
The various geographies highlighted in the map result from investments we have made across all 500 Startups funds.
1. The Silicon Valley Tech Venture Capital Almanac, Fall 2013 and TechCrunch Article May 5, 2015, “500 Startups Aims To Be The Largest VCShop In The World” http://techcrunch.com/2015/05/05/500-s
tartups-aims-to-be-the-largest-vc-shop-in-the-world/
2. Approximated as of 2/23/2016 and includes first and follow-on investments from all 500 Startups funds.
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/ Pankaj Jain
• 12+ Years in Finance
• Founded 1 startup in India
• Founded 2 non-profits in India
• Investing in Indian startups since 2012
• Led or managed 70+ investments in India, Jordan, Finland and
the U.S. at 500 Startups and prior
1. LinkedIn: http://www.linkedin.com/in/pankajjain
2. AngelList: http://angel.co/pjain
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Long-Term Capital Management

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Legal review Partner approval
Two+ investment
team members
review opportunity
Partner approval
“India is poised to become the world’s fastest growing major economy”
– E&Y 2015 India Attractiveness Survey 1
India is a very young, *mobile* and fast growing market.
• $2.1T (nominal) economy 2
; 7.7% GDP growth10
• 7th largest economy in the world by nominal GDP 3
• #2 in Internet Users with 317M Indians (209M urban + 108M rural) 4
• > 990M mobile phones 5
• 200M+ smartphones (19.2% penetration) in India 6
• India attracted $34B in FDI in 2014, up 22% from 2013 7
• Median age of 27.3 yrs 8
• 68% of the population (850M people) is under 35 years old 9
• Labor force of 502M people, 51% of which are in industry or services jobs 8
IndiaOverview
1 http://www.ey.com/IN/en/Issues/Business-environment/EY-india-attractiveness-survey-2015
2 http://en.wikipedia.org/wiki/Economy_of_India
3 http://en.wikipedia.org/wiki/India#Economy
4 http://www.medianama.com/2015/11/223-317m-internet-users-india/
5 https://en.wikipedia.org/wiki/Telecommunications_in_India
6 http://en.wikipedia.org/wiki/List_of_countries_by_smartphone_penetration
7 http://unctad.org/en/PublicationsLibrary/wir2015_en.pdf
8 https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
9 Goldman Sachs: India Internet Report – May 2015
10 Reported estimate by Citigroup in Economic Times
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/ Digital Landscape Overview
1 Only 15% of the Indian users buy online
vs 56% of usersin China. The gap
representsthe massive opportunity in
merely catching up with China.1
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Better security, payment and
remittance infrastructure will be
required to meet the next wave of
growth from rural and semi-rural India.
• On track to be the 2nd largest
smartphone market1
• 55% Smartphone subscription
growth 2
• Mobile accounts for 65% of the
total internet traffic in India.2
• Deutsche Bank estimated
FinTech market to reach $16B by
2020 from $3B in 20161
1. Deutsche Bank Report on India Internet Sector –November 2015
2. Internet Trends 2015 Report by Mary Meeker
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Global Investors in India
Others
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China
US
Ecosystem Activity in India
The Companies and Firms listed herein have not confirmed the information set forth on this slide. Additionally, certain investors
invested using other entities as opposed to investing via the venture funds or companies represented here.
Japan
Europe

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Mobile FinTech

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435M Internet
enabled
smartphones
by 2019 2
79
114
142
178
222
256
0
65
130
195
260
325
2014 2015 2016 2017 2018 2019
Projected annual smartphone sales India, in millions1
1. KPMG India Media and Entertainment Report – March 2015
2. Deutsche Bank Report on India Internet Sector – November 2015
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Smartphones

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• 3G/4G services + lower cost/better quality smart phones spurring online usage.
• Apps are the new Value Added Services
• Payment banks, initiatives by traditional banks, and startups will increase digital
payments through mobile devices.
• Mobile allows for cheaper costs for conducting business operations for SMB’s.
1. KPMG India Media and Entertainment Report – March 2015
2. Deutsche Bank Report on India Internet Sector – November 2015
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Mobile Services

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SMBs have been
chronically
underserved by the
traditional banking
system in India.
1. RBI is the Reserve Bank of India
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Mobile Banking

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/ This is FinTech in India
Unmodified image by Dipankar Dutta under CC license
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Photo Credit: blog.beam.co.in

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• Indian government pushing to move to cashless society. UPI (“Unified Payments
Interface”) is one initiative
• E-wallets, social payments & payment banks, will boost the e-payments market
significantly.
• In 2008-09, India overtook Mexico as the world’s foremost remittance market; The
remittance market has consistently surpassed FDI coming into India, and the
current annual inflows stand at > $70B.4
160M
Rupay users
conducting 20M
transactions a day 1
80%
Users of ages 21-35
use e-channels to
make rent payments 2
1. PwC Report on Electronic Payments in India 2015
2. PwC Report on Electronic Payments in India 2015
3. Goldman Sachs India Internet Report – May 2015
4. Wall Street Journal
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Fintech
$5B
Size of digital
payments by 2030 3

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/ • Transaction volume and ARPU are
increasing
• Banking, lending and accounting are
antiquated industries that need to
modernize at a rapid pace
• Indian regulations create a strong barrier
to entry for global players - fintech
innovations will be created by Indian
companies
Payment Mediums India China USA
Number of people with bank
accounts (per 100)
58 70 92
Number of bank branches
(in millions)
1.1 0.8 3.6
Number of ATM’s (in
millions)
1.14 3.07 13.76
PoS Terminal (per million) 684 5,425 17,120
Total Cards (per 1,000) 283.6 2,604 3,699
Financial Medium Comparison
Deloitte Report on Payment Bank - Opportunities and Challenges, World Bank Report on Remittance Market in India
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Fintech – Trends

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/ Areas of Opportunity
• Lending
• Payments
• Remittance
• Personal Finance
• Banking
• Equity Funding
• Infrastructure – Security/Analytics/etc
• Cryptocurrency
• Insurance
• SMB Solutions
• Trading Solutions (Order routing, portfolio
management systems, analytics libraries,
etc)
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16. /
/ Thank You
Pankaj Jain
Partner, 500 Startups
Twitter: @pjain