‘Regulators Are Not Your Enemies’, 3one4 Capital’s Siddharth Pai Tells Fintech Start-Ups

Start-Up Mahakumbh is a three-day event being held at New Delhi’s Bharat Mandapam, with over 1000 start-ups spread over 10+ thematic tracks
Start-Up Mahakumbh
Start-Up Mahakumbh

Amid incidents of regulatory violations in the start-up landscape, industry stakeholders including venture capitalists and founders weighed in their thoughts on the importance of the role of regulators in India’s fintech industry.   

Non-compliance will not take the company anywhere, said Siddharth Pai, Founding Partner, CFO, and ESG Officer of 3one4 Capital.   

“You can avoid the regulators for a month, a year or even more but can’t escape from them. Fintechs need to understand that regulator is not someone to fight with, they are not your enemy,” he said, without naming any specific start-up, during a discussion around compliance and management in fintech space at the Start-Up Mahakumbh, a three-day event for stakeholders from across the sector. 

He further added that in an industry like fintech, which is distinct from industries like B2B or D2C, the aim should not be to earn instant profits but to become an institution. If an entrepreneur is passionate, talented and visionary but does not regard the regulations, then failing is not a mere possibility, but an inevitability. 

“The regulator’s job is the most thankless one. If everything goes well, the credit goes to the industry, but if anything goes bad, it is always blamed on the regulator,” Pai said.   

Startup founders also echoed his thoughts and stressed the need for fintechs to collaborate with the industry watchdogs to revolutionise the industry given the changing times.   

Instead of trying to bypass the regulators, the fintechs should focus on creating a change in the industry and not merely achieving a product market fit, said Harsh Jain, co-founder and chief operating officer of Groww. “If the companies are in line with the regulators and the government, they will be able to innovate well and reach the customers in a more sustainable market,” he said. 

Others pointed out the laxity of government in keeping up with technology. “Not just in India, but regulators around the world are not at the same pace at which the technology and tech businesses are moving. So, this becomes an issue with the regulatory bodies to catch up with businesses. The faster they are able to get there, the easier it will become,” TCM Sundaram, founding partner of Chiratae Ventures, told Outlook Start-Up.   

These suggestions coincide with the recent regulatory snub by the Reserve Bank of India (RBI) against fintech giant Paytm for non-compliance.   

On the third and last day of Start-Up Mahakumbh, Prime Minister Narendra Modi said that with over 1.25 lakh start-ups, India is already on the roadmap to become a developed nation. He also said that start-ups have to play a major role if the country were to become the world’s third-largest economy. 

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