Demonetisation, India Stack and Small Town Start-ups

The demonetisation of 500 and 1000 notes is a huge disruption for the Indian economy. Many have talked about the benefits as well as the problems due to demonetisation. But as they say, a crisis is too good an opportunity to waste! More than anything else, this is going to push India to a cashless economy. And for once, India seems to be prepared to make it happen. The technology platform that will do this trick for India is India Stack (www.indiastack.org). It has been widely acknowledged as the one Indian technology platform that is truly leading the world. But more importantly, this platform can revolutionise lives of Indians – not just a few, but truly at a scale of a billion-plus Indians.

For those who may not have yet heard about India Stack: it is a complete set of API, covering Aadhaar for authentication, Digilocker for issue, storage and use of documents, e-Sign (digital signature acceptable under law), e-KYC, unified payment interface for financial transactions. This is all provided as public good by the Indian Government and can be used by anybody to build mobile apps that can make many services cashless, paperless and presence-less. Just imagine the impact given the 1 billion plus Aadhaar enrolments, more than 250 million JanDhan bank accounts and more than 1 billion mobile subscribers in India! You will agree, I have not used the word “revolution” lightly!

My first brush with India stack happened more than a year back, on my trip to my native place when I visited a small village of less than 200 houses. There I was told by residents how their daily wages from Government schemes of Rs. 214 reached directly their bank accounts and how they could use the money from their mobiles! And then there was the launch of Nandan Nilekani’s book “Rebooting India” in February 2016 in Pune, where he talked about the grand challenges facing India. His thesis was that Government should be providing the technology platforms on which entrepreneurs can then build solutions and transform lives. India Stack is just such a platform, and nothing like it exists anywhere in the world.

The start-up world has taken notice and already a lot of activity is happening in FinTech. Most of it is also happening in the metros. But I truly believe the really powerful use cases for these platforms lie outside of urban India. Here in a metro like Pune I really don’t have to use my Aadhaar card. But imagine the impact on the millions who at long last now get included in the financial, government and other institutional systems through India Stack based solutions.

And who do you think are best suited to build these solutions? Of course the small town start-ups that I had talked about in an earlier blog. These are the folks closest to the market, know the problems to be solved first-hand, and now with India Stack, the technology hurdle has been overcome. They now only need to come up with the right use-case and you have the makings of some great start-ups. On the other hand, there would be great start-ups in metros too, but they are more likely to address typically metro problems.

At Ideas to Impacts (I2I), we were already promoting (mentoring, angel-investing) small town start-ups that address problems of the millions in non-metro India, working out of small towns with great universities and colleges. With India Stack we are now formalising the approach, by starting an early stage fund in partnership with the the investment firm Wesley Clover International from Canada, headed by serial super-angel Sir Terry Matthews. Their Alacrity Fund, with the approach of local solutions for local problems and then taking them global, is already operational in Canada, France, UK, Mexico, Indonesia and Turkey. The end objective of this early stage fund is to make start-ups Series A investment ready. For this they follow a rigorous methodology taking start-ups through three phases – college, incubation and acceleration, with very high touch mentorship, not usually found in India. The Alacrity India fund will be head-quartered in Pune, working primarily in Maharashtra and neighbouring states. For the India fund the mentorship will include technology and business mentorship on India Stack. Mike Manson, a partner at Wesley Clover and a veteran in the India technology market, agrees on the potential for India Stack, “This truly is a market-making technology. We’ve only scratched the surface on how India Stack can be used to provide solutions to India’s unique problems”.

While FinTech apps (payments, credit) and e-Governance apps seem obvious for India Stack, a real expansion can happen with different demographics start using India Stack. Suresh Anantpurkar, a very experienced technology expert consults Governments and large companies on Mobile Governance, Mobile Payments including UPI and India Stack. He could reel off use cases that college students can build e.g. paper-less college admissions, presence-less e-Governance applications, even paperless and cashless B2B2C applications for corporates. Says Suresh, “India Stack provides a unique opportunity to Indian Businesses and Government Organizations to create a truly inclusive society, I hope the entrepreneurs in the smaller towns use these technologies to solve local problems which can be replicated across the globe.”

Nandan Nilekani and the iSPIRT team Sharad Sharma, Sanjay Jain, Pramod Varma and others are doing a great job evangelising India Stack. (Even the name “India Stack” was given by them!) They have given many talks on public forums, they are promoting it on social media, they have even conducted hackathons on India Stack. They are making a strong case that this is not just an opportunity for millions to be included in the cashless, paperless, presence-less economy, it is a huge opportunity for entrepreneurs to make this happen through their start-ups. Now the investing community needs to step in to strengthen this ecosystem. And we are glad to be the early ones in this revolution.