320. How This Fintech Investor with 49 Portfolio Companies Invests w/ Shubhanga Prasad | Aagama Ventures

0:00So my name is Shubhanga. Most of my investments are focused on India and we do any investment that has relevance in the world of financial services. So it can be pure tech, fintech, or even anything that could be embedded finance and could be agri, health, property, but there has to be some relevance to India. There has to be some relevance to financial services.

0:27Amardeep Parmar:And what makes you pick the intersection between India and financial services? Steve Jobs told, you can only kind of connect your dots looking back, right? So I'm not a career investor. I think I come from banking. So when I was in most of my work in banking has been in operations, product engineering, technology, and a bit of it in partnerships while I was in India. So the lens has always been, would I build this or would I rather buy it as a banker, as a CIO, CTO of a bank? And that's been the lens with which I started investing. Most of my investments started off as angel investments. And of course, now we have kind of institutionalized it as a fund as well.

1:14Amardeep Parmar:And with the investments? I grew up in India and grew up in financial services. These are the two things that I understand, and hence India and financial services. And how many investments have you made now? So I think about 49 to date, about six of them here in the UK, 43 in India. But that 43 also has some non... In the initial days, we also have done mental health, mobility, and a couple of other spaces as well. but quickly realized, you know what, there are nuances, dynamics of that sector we don't fully understand. So we quickly said, okay, let's just focus on what we understand well. And I think it's been, for the last four years, it's only been tech and financial services.

2:05Amardeep Parmar:And in financial service space, right? So for people in the UK maybe aren't too aware of what's happening in India right now. Sure. What's happening in that financial services space? Like where's innovation happening? What are you seeing that's really interesting? So I think when you look at India, right, so in my mind, I think India has seen the first decade, decade and a half of digital entrepreneurship, you know, which is basically entrepreneurs trying to build digital companies in India. In the 2000s, probably we saw the Infosys and the Wipros of the world coming out, which were fundamentally services companies and or they could be, you know, BPOs, KPOs, etc.

2:42Service organizations.

2:47Have you heard of this company called Flipkart in India, which kind of was bought over by Walmart in 2016? And that was like a pivotal point in the Indian product ecosystem. And that essentially has burned out so many more entrepreneurs who are daring to kind of say, you know what, I know what are the problems in a certain ecosystem and I will build a digital product and consequently a business and overall a company to solve some of those pressing problems in their spaces. And that has blown up because there's also been an extremely good tailwind from government policies and the regulatory policies.

3:31And the first thing that actually got digitized is financial services in India. Obviously, there was also e-commerce that happened in parallel, but e-commerce also happened because financial services got digitized. And today in 2026, if you kind of look at it, think of anything to do with banking slash financial services for people like you and I. It's predominantly digital. But having said that, India is a vast country. there are 30 million plus people like me who were grown up in India but are living outside India and if you look at that cohort of people who are like outside India they're probably the wealthiest bucket of or cohort of people who interact with the Indian ecosystem.

4:29so India gets about 150 billion plus maybe it's closer to 200 billion now of inward remittances every year today they just get categorized as hey these are payments going into India but what really happens on the back of those payments coming in they're essentially going into investments either in companies or in real estate so I think I think that entire experience of people kind of investing back in India is going to see a dramatic shift in the next 10 years, is the sense that we have from the fund. And we're going to invest a lot more, hopefully, in people who are making that difference.

5:08Amardeep Parmar:What's some of the companies you invested in recently that are doing? What's some of the most recent changes you're seeing there as well? Because like I said, it's been like a decade of change so far. What's at the current cutting edge? What are your more recent companies doing? This is one of the most recent investments that we did. It's a wearable AI. Now, you might question where is FinTech here? At the end of the day, these are 25, 26-year-old engineering folks coming out of IIT, Indian Institute of Technology, Madras, two blokes who have kind of built an amazing product from Bangalore in India, which probably 10 years ago, Indian ecosystem would not have.

5:50even if there were people who were dreaming about it, the ecosystem was not present to even dream of a hardware and an AI product, right? Today, when I kind of looked at their product, and I think I got introduced about two years ago, I was kind of thinking about the first project that I did in YesPan probably 15 years ago or 12 years ago, which was to implement a CRM in a large organization, and we got our shabashish, as we call it. We got our job well done, but at the end of the day, the kind of adoption and usage was not as good. 12 years ago, mobile was still new. The mobile apps were still novelty, I would say, and relationship managers and people who are otherwise interacting on behalf of the bank with the customers were having conversations like how we're having, and were having to come back to their branches or offices, type it into the CRM that we had implemented to capture that, okay, hey, I met Amal today.

7:06These are his financial needs. These are his whatever. He needs a credit card. He needs a home loan or whatever it is. And they need to kind of come in and type. Of course, things have evolved from then. But even now, human-machine interface is a low-fidelity activity. So this is a device which is essentially kind of enabling people to translate their voice conversations, both in virtual world and in real world, to enable or translate that voice conversations to machine-understandable language. So why we are interested as a FinTech fund is because at the end of the day, there are thousands of people who are in the business of financial services and they are having to create organizational knowledge for their own organizations.

7:54On the back of which, of course, the use cases are immense. So can we actually be the conduit that can actually help such a hardware AI variable to be on the next potentially of any and every relationship manager that can enable them to focus on the customer and not having to kind of graduate about coming back and typing it in into their systems, which is very much needed from the organization standpoint. So that's the link that we are seeing. So with that, I'm sure, if you kind of look at financial services, the breadth of opportunities that are available is immense. And fintech is like a catch-all term.

8:35The way we kind of look at fintech is really in three layers, right? So layer one is companies like this, which are building pure tech, which can help financial services or otherwise. It could also help in a retail or HR use case. But their go-to market is FS. So that's how we can kind of help them. Second is vertical tech companies. So it could be a CRM, it could be a co-banking system or a co-insurant system. But they're all again technology companies trying to serve some vertical within the... So that is layer one. Layer two is where typically companies, so what we call as payments company or credit tech, so they end up making their money by essentially delivering a financial service.

9:30And if you're delivering a financial service in most jurisdictions, definitely true for UK and India, they are regulated. So that's where regulated firms kind of come into play in one form or another. Here it could be an FCA regulated in India, it could be regulated by RBI or SEBI or insurance regulator there. But fundamentally they are regulated. And layer three is embedded finance, where finance is getting embedded into ecosystems beyond financial services. So it could be an It could be an agri-fin intersection, it could be a health-fin intersection, so on and so forth. So that's why I think FinTech is like a catch-all term for us.

10:09Many a times FinTech is probably also doing a disservice to the breadth of, I mean FinTech is a nomenclature, is doing a disservice to the breadth and the depth that this sector offers. But that's a long answer to your question in some sense.

10:26Amardeep Parmar:So you mentioned as well about how the regulatory side of things, right? And obviously, the UK and India are very different systems in that way. When you've come from India and come to the system here, where do you see the, I guess, always potential arbitrage of where is it that the Indian system has opportunities that the UK one doesn't and what can you bring from the UK to India? For sure. I think it's the same in the sense that fundamentally financial services world over is the same. the way a bank operates or the business model of a bank is the same across. If you look at what are the differences, I think FCA and PRA, and this is my kind of judgment and view of it, FCA and PRA has their regulations in a directional fashion.

11:13So it essentially means that they don't necessarily say, hey, bank, you kind of use Aadhaar for KYC. They just say, okay, you tell us what your KYC policy is, but make sure that you follow. That's what you're audited against. But in India, RBI is a lot more prescriptive, or SEBI is a lot more prescriptive. So from that standpoint, the kind of innovation that is essentially there is a lot more in the digital public infrastructure space rather than in the private space. So here, the concept of digital public infrastructure is still not there in the UK. which I think is massively helpful, especially if you're looking at making innovation accessible to everybody at a citizen scale.

12:03Anybody can think about building something on an identity layer or a payments layer in India. You don't need to think about how innovation is happening at the citizen scale there. But here I think all of those opportunities are available at a premium. It's still available, but the cost of access is probably a little higher. So the goodness of UK is regulations are more directional. And the goodness of India is infrastructure is citizen scale. So anybody can think about it. I think that's where I see the two kind of dichotomy. And also equally, UK is an open economy. India is quasi open. India is not foreign capital cannot just freely flow into India or freely flow out.

12:55So that essentially makes regulation a lot more kind of prescriptive in some sense. So that essentially means that all digital innovation that is happening is having to conform to the boundaries that the legal system and the regulatory system is there in India, which both makes it hard and sometimes it also makes it difficult because you're then kind of trying to push the boundaries of regulation, which you never know could suddenly be the boundaries of legal systems. So I think that's where the challenge is for an Indian entrepreneur. And from our point of view, we kind of say, we don't like regulatory gray areas, especially if you're making money from, if your revenue source is from a financial service, don't play around with the regulations, simply because at the end of the day, it's not worth your time, effort, trying to kind of innovate, in a space that the regulators don't like or the legal system doesn't like, right?

14:03So which probably can happen here in UK ecosystems, or it can also happen in the, I think Dubai is increasingly kind of becoming, UAE is increasingly becoming very interesting for financial innovation.

14:17Amardeep Parmar:Hello, hello. I hope you've enjoyed the show so far. I'm Amadeep Parma, co-founder of BayHQ and the host of this show. For those of you who don't know, BayHQ is the community for high growth Asian heritage founders and investors in the UK. Over 7 ,500 people have attended our events. 200 people have been through our impact programs. and obviously there's been over 250 episodes of this podcast. If you want to join us and take part in the programs and come to the events, go to behihq.com forward slash join. We also just released our first ever book called Startups for Outsiders, which you can get on Amazon now and the link is in the bio.

14:58Amardeep Parmar:Hope to see you soon at our event. Hope you enjoy the rest of the episode. You said as well about the citizen scale right for India and how the barriers are a bit lower, it's not as premium to get in. Then obviously you're going to probably see quite a lot of deal flow. And how are you then deciding at that stage where maybe things are a bit more open, which people are back? What do you look for in those founders who maybe they don't need as much background as might do in the UK for FinTech? In very early stage, we kind of call it as a decision waterfall in our kind of internal parlance. fundamentally the first layer is the founders themselves and you know irrespective of how attractive a space might be right you are at the end of the day working with a person or a team of people whom you need to really resonate with so that foundational kind of aspect is the first filter in our decision waterfall.

16:00Immediately after that comes what we call the founder problem fit. Of course, product market fit is much talked about. But I spend a lot of time trying to understand, you know what, most of these are individuals who have amazing kind of backgrounds. They understand their subject really well. and they probably would have been earning, you know, definitely in the hundreds of thousands of pounds, if not millions, right? So why leave all of that and actually dedicate their life to what they're trying to do? And most often, even before that becomes a company, there is a very nuanced answer to why they want to do what they want to do, right?

16:44And that becomes a second important filter for us. And only once we kind of pass through these two filters of why they're doing what they're doing and who they actually are, will we actually go into, okay, is the problem interesting enough? Do we resonate with the problem? Is the solution approach interesting? So we internally kind of keep joking that we pretty much always start with a no. I mean, we're not going to invest most often. And we kind of build our thesis to us. So it's almost like a six or seven layers. So founding team, the problem, the solution approach, so obviously the same problem could be looked at in multiple ways.

17:24And given our backgrounds are in operations and product and engineering, for good or for bad, we have an opinion about how you can solve this. and so if there is a meat of minds on the solution then we get into the GTM and the way in which they construct their business pricing positioning competition and so on and so forth then we get into the financial you know financial aspects of the company do you have too bloated you know team to build what you're trying to build or are you too thin you need to actually add people and only then will we actually start getting to the round constructs and so on and so forth because I think many times all of these kind of happen but maybe we don't do the deal because the founder ambitions is very different from what we think is a reasonable value for that company right so so it's a dynamic that kind of will go and frankly I think we're also learning we are very early in the we're barely a VC I would say right so more of a builder than a VC till date.

18:29Amardeep Parmar:You said about being a builder, right? And we're talking earlier about how you have a really big network in India about the different layers of potential customers for the financial services as well. What's the importance of that in terms of your value add to the people you invest in where you have the background in banking yourself and you have the network? How does that make a big difference to them? So I think I should tell you about my partner, right? So he and I worked together in Yes Bank probably a decade and a half ago. So he left Visa, which was his last full-time role in 2018, and started something called the Fintag Yatra in India.

19:03Basically that was essentially, like I said, 2016-17 is when the Flipkart acquisition happened and there was a lot of buzz around what does Indian startup look like. And he left and he said, I'm going to figure out what I want to do. I don't know what I want to do. and he started this yatra, essentially take a car, we go around the country to meet innovators on ground. Alongside innovators, we also meet investors who have been investing in those innovators and people who are essentially buyers. So it could be banks, it could be insurance companies, brokers, wealth managers, so on and so forth.

19:44And he has been doing it for the last eight years and I have joined him for the last four years since my work north. What it has helped is whenever we are meeting, so we probably meet about 400, 500 entrepreneurs in a year through this Yatra and then there are a bunch of initiatives that the team runs called Fintech Breakfast in India. We do something called Guftgu. Guftgu is a Hindi word which essentially is more like you're kind of thinking aloud about something. So all of those events cumulatively kind of result in about 400-500 different conversations. And we kind of then at the end of the year, we take them to Yatra in the Himalayas.

20:34It's a retreat for about three days where we call in innovators. We have the best of the startup founders, their top 10, top 15. And some of the bankers and people who are kind of in the CXO positions in banks come there as well for deliberation of what are those innovations that are relevant in today's ecosystem. What we realized, and this is over a period of doing this for a few years now, is there is layer one of what we know that we can add and provide value. Layer two is where the ecosystem from the banks insurance companies who are operators truly kind of you know provide them with concurrent will i buy it or will i not kind of a value add and third layer is actually from people who have been big investors right so we have for example uh ifl we have the likes of jafco we have nexus venture partners so on and so forth who have been kind of participating in our in our ecosystem to kind of provide that value add.

21:40And they have been co-investing with us. So that's been the learning for an entrepreneur that, okay, if they're actually coming to us, they're getting one, our view, what has built us. Second, as operators who are actually in decision-making roles today. And third, finally, with investors who are looking to kind of take an equity stake in your company, right? So all of those is something that we try to kind of make it available for all entrepreneurs, whether we invest or not.

22:10Amardeep Parmar:And founders are trying to work out like, okay, I want to sell to JP Morgan. I want to sell to Barker's ABC. How do they find the right person? It's very difficult. But I think equally, the ecosystem has matured a lot more. I can definitely talk from an India perspective, and I would love to kind of pick your brain on how to do that in the UK. But in India, because of the work that we've done over the last seven, eight years, so the Indian bot lace or the JP Morgan is basically ICICI bank and HDFC in the banking world. And there are, you know, equivalents in the insurance world as well. So we have kind of interacted with pretty much any and every decision maker.

22:53And most of the time, bankers also kind of move within these big banks. So by virtue of them having seen the kind of investments that we have done, the kind of companies that we have gotten them from an innovation standpoint or from an investment standpoint, they know that there is probably a 95 to 99 percent probability that if there is a founder who is trying to do something in the FinTech ecosystem, then we would know them and they would know us. So we end up kind of trying, I mean, we try to create that bridge for those startup founders. would obviously be also kind of very, very, we add our layer of judgment in terms of whom we should be kind of taking to whom, you know, which organization.

23:39But most often it's a quasi-open ecosystem. So we also have most of these people also on WhatsApp groups now, city chapters. Some founders are there, folks who are in organizations are there. And people typically can ask, you know, hey, I'm looking to meet somebody in some place can be actually kind of get an introduction or whatever and if we know we would do that or if people in the ecosystem know they would do that like for example delhi delhi whatsapp group delhi fintech whatsapp group has about 600 650 people and these are all people who are either ex-entrepreneurs current bankers or ex-bankers current investors or ex-investors right so and that's how you end up kind of pretty much like what you're trying to do here in in london with the British Asian community.

24:27I think, but we are focused more on the Indian financial services community in some sense.

24:31Amardeep Parmar:Even with that as well, because people worry about this open side of their community, right? And the way we see it is that like, if we let people talk to each other, then one, they get value and we don't have to be the middleman all the time. It's quite nice too. But then because people appreciate that, when we ask one of our portfolio companies more about that as well, we're also then able to get through quicker because people have got value from the community. Yeah. And that goodwill and it compounds right over time. So obviously because people for your WhatsApp groups have met new people and have been able to do things, if you were then to ask somebody who's got value from you for free or just being part of the community, then they're going to help you out.

25:06Amardeep Parmar:They're going to help your portfolio companies because they value what you're going to do for them. I think a lot of credit for the community goes to my partner. I think I'm learning a lot about how to build communities, how communities can help. both Pankaj and Abhisheanth who are my partners in the fund are amazing at what they do and I think and I think that's how fundamentally we need to enable people connect with people and that's that's what I'm learning more and more that especially in the business see I mean I grew up in the professional world right in the business world people essentially first meet people and want to know, okay, do I want to do business with you?

25:50Everything else comes later. And I think that's where communities kind of play a large role in just saying, hey, you know what, I know Amar. I think you should talk to him. I think that's like the first step. And as much as these platforms and what you're building and what Abhishev and Pankaj have built in India, what it does is it just tries to cut down on those layers that otherwise maybe a founder would have had to write to the marketing team or the innovation team in one of these big banks or organizations and then kind of to find the right person, it would have just taken longer. Here it is.

26:29I know them. Why don't you just meet them?

26:32Amardeep Parmar:And you said back there as well how the co-founders who've done a lot of the community side, what's the part that you're the most interested in? What do you love doing the most about your role? I mean, see, most of my focus is actually kind of working with the founders on those specific. I think I get latched on fairly lower down the funnel in our engagement. So Abhisheh is obviously pretty much connected with almost anybody and everybody in the startup ecosystem. Pankaj is connected with anybody and everybody in the Indian investor kind of ecosystem. I come in the funnel, especially once they kind of see, you know, there's some interest.

27:11So I come more in the funneling aspect and I'm the guy who actually ends up saying more no.