The Japan External Trade Organization (JETRO) is on a mission to strengthen the India-Japan corridor. The organisation, which supports Japanese startups and enterprises either aiming to make their presence felt in the Indian market or hoping to collaborate with Indian players to expand their business globally, also lends its support to Indian startups and companies eyeing the Japanese market.

The company brought together four Japanese startups at TechSparks 2024 to discuss ‘An ecosystem of opportunities: How international startups can expand to India’. The conversation was a deep dive into the opportunities offered by India’s robust startup ecosystem and the various factors that make the country a prime location for international startups. 

The roundtable panellists included Mayank Vishwakarma, Director – Customer Success & Presales, primeNumber; Suguru Kawashima, CFO and Head of Global Business, Findy; Reiji Kobayashi, CEO and Director, Hakki Africa; and Jagjeet Singh, Managing Director, Digireha. Takashi Suzuki, Chief Director General, JETRO, moderated the panel, offering his insights and experiences.

Bringing Japanese companies to India

Suzuki-san, who has been working with JETRO for 30 years, opened the panel discussion by talking about the promise and potential of the Indian startup ecosystem. He shared that one or two Japanese startups approach him every day to understand how they can expand their business or make a connection with Indian partners and set up shop in the country.

He revealed that during his time in India, he began to see an awakening and change in the Indian startup ecosystem, especially post-COVID. Today, as many as 1,400 Japanese companies are established in India. However, these numbers lag behind China, Thailand, Singapore and Malaysia, and only 15% of the Japanese companies in India are small ventures. “Our biggest challenge is how we can promote more small-sized Japanese businesses in India. My ultimate hope is that there is going to be a Japanese unicorn in India, he said. 

What India holds for international startups

Delving into the opportunities that await Japanese entrepreneurs, Suzuki-san asked one simple question: “Why India?”

Vishwakarma spoke about the volumes of relevant data generated in India, citing that as a primary reason for primeNumber to want to expand to the country. He and the panellists concurred that Japanese entrepreneurs hold a common belief that if you can make it in India, you will be successful across the world. He also pointed out that India’s wide consumer base allows the company to soft launch products, get relevant feedback and make adjustments as needed.

Kawashima-san pointed out that India’s talent pool is both wide and deep. Out of the estimated 25 million engineers in the world, four to five million are from India. He emphasised the low cost of labour and credited Indian entrepreneurs with both the grit and talent to make it in the competitive Silicon Valley. 

“I have not seen many Japanese software companies succeed in the world, especially America. So many Indian founders are making their presence felt in California and across the world. I now think we need to attack from India to the global market,” he shared.

Kobayashi-san noted that Japanese companies should look to expand globally, given that the country’s population is declining. He theorised that Japanese companies can learn more from emerging markets, like India.

Navigating the maze of the Indian ecosystem

While India’s immense potential for international enterprises is one side of the coin, the complexity of its regulations, administrative issues, import, and other challenges around running a business in India comprise the other.

Kobayashi-san highlighted certain infrastructure challenges in India, highlighting power outages, infrastructural issues, and water problems. Singh, when asked about the inherent challenges in India’s healthcare sector, revealed that he had enrolled in a course at Indian School of Business, Hyderabad, to understand the sector and convey the right information to his Japanese counterparts.

Panellists also shared that building the right kind of networks and partnerships in the Indian startup ecosystem can help Japanese companies reach a wider audience. Kawashima-san revealed that he made over 1,000 connections on LinkedIn in the last year, and is “slowly meeting the right people to take the business forward in India”. 

Watch the full video here:

Reserve Bank of India (RBI) has issued a cease and desist order to several NBFCs, including DMI Finance and Navi Finserv, due to supervisory concerns related to their pricing policies.

Kolkata-based Arohan Financial Services Limited and Chennai-based Asirvad Micro Finance Limited have also been asked to stop lending.

The RBI found that these companies were charging excessive interest rates and failed to adhere to regulatory guidelines, leading to restrictions on loan disbursals starting from October 21, 2024​.

These companies also breached the Fair Practices Code, with further violations in household income assessment, loan repayment capacity, and asset classification. These were highlighted through both onsite inspections and offsite data analysis, the RBI said in a circular.

“Navi Finserv is currently reviewing the circular received from the RBI and is committed to addressing all concerns raised by the regulator promptly and effectively, prioritising what’s right for our customers. The company remains dedicated to maintaining the highest standards of compliance, transparency, and customer care in its operations,” a Navi Finserv spokesperson said.

The RBI is attempting to educate its regulated entities about the responsible use of their regulatory freedoms, including maintaining fair and reasonable pricing.

DMI Finance had recently acquired the troubled buy now pay later startup ZestMoney and has been under scrutiny for its pricing practices. Navi Finserv, on the other hand, recently completed a $24.5-million personal loan securitisation transaction with Goldman Sachs (India) Finance.

Last week, during the Monetary Policy Committee (MPC) meeting, RBI Governor Shaktikanta Das emphasised concerns about the aggressive growth strategies of some NBFCs and the potential risks they pose to financial stability.

He highlighted that while the overall health of the NBFC sector remains strong, certain outliers are pursuing unsustainable practices, such as high interest rates, excessive processing fees, and target-driven growth without sufficient risk management.

This has been particularly evident in microfinance loans, credit card debt, and unsecured consumption loans​ he said.

This move is part of the RBI’s broader strategy to ensure that NBFCs and MFIs operate within a framework that protects consumers, especially in the context of small-value loans. The RBI has been actively working to mitigate issues related to unfair lending practices in the microfinance sector, particularly in light of the recent trends observed during its regulatory reviews.

(The copy was updated with Navi’s response.)

At TechSparks 2024 in Bengaluru, a masterclass on ‘Leveraging FinOps for Success: A Guide for Startups and VCs’ shed light on a crucial yet often overlooked aspect of startup operations. Led by Satyam Santosh, Startup Program Lead – APAC at OVHcloud, and DVS Shiv Kumar, Solutions Architect at OVHcloud, the session provided invaluable insights into managing cloud costs effectively.

The importance of FinOps for startups cannot be overstated. As Santosh pointed out, “Startups really need to understand, especially early-stage startups when you have a dearth of money in your bank account. You need to look at cloud costs and understand how you should be able to control the costs that you’re incurring on your infrastructure.”

The masterclass began with a startling revelation: companies often overspend on their cloud budgets by 26%. This statistic underscores the critical need for startups to adopt FinOps strategies from the outset. FinOps, or Financial Operations, involves understanding and optimising cloud costs to ensure financial efficiency and accountability.

Kumar explained the core of FinOps: “The first step in FinOps is to identify and understand all cloud costs and services being consumed. Are these services that I am consuming really needed for my application, or can I optimise it further?”

Common pitfalls for startups

Both Santosh and Kumar highlighted several key pitfalls that startups often encounter:

• Hidden Costs: While direct costs like subscription fees and implementation are obvious, hidden costs such as bandwidth, data transfer, and vendor lock-in can significantly impact a startup’s budget.
• Data Transfer Costs: These can escalate quickly, especially for startups dealing with large amounts of data. The speakers recommended using tools like Cloud Easier to estimate these costs before deployment.
• Storage Costs: With the increasing amount of data being stored, any operation performed on this data can significantly affect cloud costs. Tools were suggested to help startups estimate and optimise storage costs.
• Vendor Lock-in: This was emphasised as a major concern. Santosh shared a cautionary tale: “We have a fantastic example from one of our startups from the France ecosystem. It was an edtech company… It actually lost the deal with the French government because the kind of code and architecture it had was so deeply ingrained in the cloud service provider it was using.”

Strategies for success

To avoid these pitfalls, the masterclass offered several key strategies. First, startups should integrate FinOps responsibilities into existing teams rather than creating a separate department, ensuring a more holistic approach to cost management. Simultaneously, creating a culture of cost awareness is crucial, with employees trained to be accountable for the services they use.

The speakers emphasised the importance of adopting cost optimisation tools like Cloud Easier, Cloud Mercato, and Harley to compare providers and optimise costs effectively. They also stressed the need to optimise cloud usage by right-sizing instances and leveraging reserved instances to mitigate high computing costs.

Finally, implementing chargeback processes to map cloud bills to different departments was recommended to ensure financial accountability across the organisation.

Leveraging cloud provider benefits

The speakers also emphasised the importance of avoiding over-reliance on managed services and adopting open standards to maintain flexibility and avoid vendor lock-in.

Interestingly, the masterclass highlighted how some cloud providers, like OVHcloud, offer free bandwidth, which can significantly reduce monthly costs. “There are very few cloud services in the market that actually give you totally free bandwidth,” Santosh noted, emphasising how this can lead to more predictable monthly bills.

The session concluded with advice for startups to leverage the benefits available through cloud service provider startup programs. These programs often provide credits, technical support, and even access to funding opportunities, which can be crucial for early-stage startups managing cloud costs.

In an era where cloud services are integral to most startups, mastering FinOps is no longer optional—it’s a necessity. As this masterclass at TechSparks 2024 demonstrated, understanding and implementing FinOps strategies can be the difference between a startup that struggles with unexpected costs and one that scales efficiently and attracts investment. For founders and VCs alike, the message is clear: FinOps is a critical component of startup success in the cloud-first world.

Watch the full video here.