More companies will have to focus on profitability in future: Nikhil Kamath

If interest rates continue at their current trajectory, the appetite will go down, impacting the consumption and the markets, co-founder of Zerodha and True Beacon said

It will be harder to raise money in future as they might have done 5 or 10 years ago. More companies will now have to focus on profitability. In an exclusive interview, Nikhil Kamath, co-founder of Zerodha and True Beacon, spoke to Raghav Aggarwal about the future of fintech and funding in India. Edited excerpts from the interview:

What do you think made Zerodha and True Beacon so successful?

We started in industries which were ripe for change when we began. Being in the right place, at the right time and with the right team has made these companies successful.

What factors must the entrepreneurs consider before deciding to bootstrap or seek venture funding?

It's more a factor of what the market is willing to give. Considering where the world is today, with the high inflation and rising interest rates, it will be harder for people to raise money as they might have done 5 or 10 years ago. More companies will have to focus on profitability.

What is the future of fintech in India?

Fintech is a big opportunity. Nothing has changed there. Penetration levels in India remain low. Can I call the near-term cycle of what will happen in the next six months or two years? Probably not. But from a 10-20 year outlook, the number of people using fintech products in India will go up.

What role will Bharat play in the success of fintech in India?

It will be big. As our GDP per capita goes up, a lot of growth will happen in rural India. I hope we do not go the China way. The future of cities will be more fragmented in a world dominated by climate change issues. There will be a lot of backward immigration and many economies of scale versus metro cities. It will exaggerate the growth at which rural India will adopt fintech and technology.

Will inflation continue to trouble the Indian markets?

Indian markets are strangely strong. There is a lack of clarity why the world is correcting 25-30 per cent, and we have not corrected that much. However, inflation will be here for a while, and interest rates will be up. If they continue at their current trajectory, the appetite will go down. It will impact consumption and, in turn, markets.

What do you think about ASBA?

I do not think there will be a significant impact. The amount of money available for IPO might go down temporarily.

However, IPOs should not become the dumping ground for FIIs, early investors, PEs etc. They must leave more reasonable value and opportunities on the table for retail investors to apply.

What are your views on SEBI discontinuing the usage of pool accounts for investment in mutual funds?

BSE has made a lot of things convenient for investors. From a regulatory standpoint, the investment ecosystem is becoming significantly safer by virtue of what SEBI is doing.

Where do you see the next wave of innovation in the world of retail investment coming from?

Tech around climate will become a significant sector in the next 10-20 years. Geo-engineering companies which attempt to modify or alleviate the side effects of climate change have a big opportunity. This includes companies dealing in renewable energy etc.

We hope more innovative companies list on the exchanges.

What would be your one piece of advice for entrepreneurs?

Growth at all costs and at all times might not necessarily be an answer. It feels like the world is slowing down, and the next few years will be tight. Next year or two might be a time of preservation.