Companies that can better connect banks and card players look investible

Bengaluru: Fintech focussed venture capital firm QED Investor is in a wait and watch mode on future investments in India. The VC firm’s partner and head of Asia Sandeep Patil says he expects some firms to fail in the next six to eight months, after which it would be a good time to make an investment.

“We want to see how this cycle plays out while we continue to evaluate companies. We see increasing clarity and mutual appreciation among banks and fintech players. Companies that can better connect banks and card players look investible,” says Patil, who heads QED’s investments in fintech unicorn OneCard and others like Jupiter, one of the most valued startups outside the unicorn club, and Refyne.

Credit card provider OneCard’s revenues in FY22, according to reports, was Rs 98 crore, while losses stood at Rs 182 crore. Neo-bank Jupiter, valued at $710 million, had losses of Rs 164 crore on revenue of around Rs 19 crore.

Patil said QED Investors do not want to look at wealth-tech, because players in that segment have not been able to explain unit economics. The nature of financial services, he says, is such that unless a company is profitable at a unit level, no amount of capital can allow it to grow to profitability. “We spend time understanding the company’s current revenue model and the ability to stretch it with scale,” he says.