fampay: Colleges must push entrepreneurship culture: FamPay founders
Indian colleges must encourage a culture of entrepreneurship by cultivating strong alumni networks and promoting innovation, said Sambhav Jain and Kush Taneja, the founders of teen-focused fintech startup FamPay, which
won in The Best on Campus category at the Economic Times Startup Awards 2021. In an interview with ET’s Ashwin Manikandan, Taneja and Jain spoke about their experience of building a startup in the middle of the Covid-19 pandemic, pitching to the biggest venture capitalists and how they were inspired to launch FamPay. Edited excerpts:
You founded FamPay while you were in the final year at IIT-Roorkee. Was it always the plan?
Sambhav Jain: Kush and I have known each other from Day One of college. Right from our first internship, we knew that we wanted to be associated with a startup. Even before FamPay, we were working together on various ideas. We had worked together on a mess management app in our third year, which went on to become the official dining app of IIT Roorkee. By the final year, it was clear that we won’t take up any placements.
Kush Taneja: We were brainstorming every day about several problem areas across the board – be it ride sharing, food management, payments. At the time, we were never thinking about business propositions. It was just brainstorming for the sake of it.
How did you arrive at the idea of launching a fintech startup focused exclusively on teenagers?
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SJ: We looked at peers and everybody was studying rigorously for placements and that too for jobs they were not sure about – just to get lucrative salary packages. We realized that for most teenagers or young adults, the idea of money is a roadblock, rather than an enabler for greater aspirations. One would assume IIT had the smartest kids, but the reality is that most schools and parents have never taught us about money or finance or how to think about it. The cost of learning something at an early age is much lower than earning at a later time. That was the thought behind the concept of a teen-focused banking solution, with payments as the first use case.
KT: The concept was easily relatable to us, as we were taking cash from our parents just three years ago. While in college we got access to UPI through our bank accounts. Even the thought that there was a segment just two years younger than us who did not have this access was a stark one.
Earlier this year, you raised $38 million in a Series A round, one of the largest ever in India. How was it to go from campus to pitching to the biggest VCs in town?
KT: Earlier, when we were building products and got stuck, the instinct would be to Google it (laughs). But fintech is a different ball game in its complexity. We started talking to banks and other entrepreneurs. We met our alums in (fintech firm) Razorpay who helped us a lot. It was difficult, but one thing that helped us was following Y Combinator very closely. We relied heavily on their public resources even before we applied there.
Your first big break was when you got accepted by Y Combinator for the 2019 batch. How was the experience?
SJ: The moment YC happened, things started becoming easier than in college. They helped us navigate through challenges, problem statements and obviously they come with their network. They connected us to other founders and people also started taking us seriously.
Indian universities are known to be academically rigid and grade oriented. What can be done to encourage more entrepreneurs to emerge from Indian campuses?
SJ: In our time, the ecosystem and culture in IIT-Roorkee was very good. We were actually allowed to focus exclusively on building our idea in the last year, which helped us massively. They also used to invite different entrepreneurs and they were huge inspirations. It’s a fundamental problem in the education system where innovation is not as much incentivized as higher grades. Institutions must focus on how to encourage innovative ideas over just grades.
KT: One good thing campus had was an incubation center which would fund early-stage startups. The support would be around Rs 20-25 lakh for promising ideas, but that was good enough at such a stage. We also had a good alumni network, but we feel institutions can perhaps make better use of these networks. Innovation is not just in tech, I feel institutions don’t incentivize research.
How challenging was it to navigate through the Covid-19 pandemic?
SJ: It’s really hard to measure the impact of a pandemic. There were pros and cons. Speaking of cons, we had a strong go-to market in 2020. We were ready to launch in partnership with coaching institutions, especially in towns like Kota. We couldn’t obviously launch the product because of the uncertainty. The second impact was that kids were not going out anymore. Most of our use cases were cut down. Third is that the possibility of word-of-mouth marketing and visibility of our card just diminished. On the brighter side, expenses moved online. However, we would have done better if not for the pandemic.
Building a fintech business in India is considered highly challenging because of evolving regulations and high competition. What were the challenges?
KT: With banks and regulators, our learning has been that we have to be patient. Earlier, we used to think we need to do everything at startup speed in one or two weeks. But we realized that with banks we need to have multiple conversations. For instance, earlier we were a little apprehensive about the concept of KYCs, but when we saw the kind of frauds and the scale at which they were happening, we realized its importance.
SJ: The irony is that there are challenges but there is a lot of scope. There is a lot of thought behind the regulations and the system which allows us to grow at such a scale.