'Series B, C funding gap is an attractive opportunity for us'

With global, crossover capital fading in the market, the mid-stage funding gap in the country’s fintech space has widened. US-based venture capital firm QED Investors, which has backed companies such as Jupiter and OneCard, sees that as an attractive gap, says Sandeep Patil, partner and head of Asia. Ina conversation with Ayanti Bera, he explains why the firm is now eyeing Series B and C deals, how valuations are behaving, and where the next big fintech opportunities lie. Excerpts:

- SANDEEP PATIL, PARTNER & HEAD OF ASIA, QED INVESTORS

Earlier this year, QED began looking at Series Band C deals in India. What drove this decision?

There isa meaningful gap in financing at the Series B and C stages.A lot of capital is available at seed and Series A, but after that, until an IPO, companies often get stuck for capital. Many cross-border and crossover funds have faded from the market, so founders end up looking abroad for capital. That gap is attractive for us because we area group of operators. Once the basic foundation is in place suchas unit economics, a growth strategy, that’s where people like me can plug in and help founders think about profitability, growth and building a competitive moat.

Valuations in AI seem to be running hot. Howare fintech valuations trending in comparison?

InAl, growth rates are unprecedented and potential is unproven, so the multiples look wild. In fintech, especially lending, you don’t want hyper-growth until you understand NPAs and unit economics. I’m actually happy when lending companies take time to slow down, prove economics and then accelerate. So, we haven’t seen fintech valuations go crazy in the same way.