The cryptocurrency market has seen unprecedented growth in the wake of the pandemic as Indian’s scramble to look for new sources of income during these uncertain times. More than 10 million new investors have started trading and investing in Crypto in 2021 itself, globally.
Even though Cryptocurrency is legal in India, there are no regulations for it as of now. It also cannot be used as a legal tender of money in India. The most common types of Cryptocurrencies Indians are investing in are:
Until quite recently, the only way to invest in Crypto was through one-time purchases. However, investors are turning to a new method of investing in crypto and that is investment via a Systematic Investment Plan.
A Systematic Investment Plan or SIP is a way of investing wherein the investor invests a fixed amount of money at recurring time intervals. The investments can be done daily, weekly, monthly, yearly, etc.
In the past few years, a number of online platforms have emerged that provide a secure transaction environment for investors to invest in Crypto through SIP.
However, due to the highly volatile and risky nature of the market, these platforms only offer SIP options in Bitcoin and Ethereum for now. The top platforms for Indians to invest in crypto through SIP are:
Smart investors have realized the benefits of investing in crypto through SIP and, as financial awareness and literacy increases, more and more investors are opting for this method instead of the one-time buy/sell method.
Even with the highly volatile nature of the Crypto market, it has been observed that Bitcoin has been one of the highest performing assets with high returns in the long run. With a long term Systematic Investment Plan, the expected returns are very favorable for the investors.
A Systematic Investment Plan does seem to be the new and smarter way forward when it comes to investing in Cryptocurrency. This method has more benefits than drawbacks and the expected long-term returns look promising.
Drishti Jain
MSc Finance, London School of Economics & Political Science
Brand valuation plays a significant role in mergers and acquisitions. Potential acquirers of branded companies, increasingly use brand valuations to provide comfort that the price being paid for a company can be substantiated by reference to the value of specific intangible assets as well as the tangible assets being acquired.
“Intangible assets are recognized as highly valued properties. Arguably the most valuable but least understood intangible assets are brands” ISO 10668 Brand Valuation – Requirements for monetary brand valuation
The ISO 10668 standard defines brands as “marketing-related intangible assets including, but not limited to, names, terms, signs, symbols, logos, designs, or a combination of these, intended to identify goods, services and/or entities creating distinctive image and associations in the minds of stakeholders, generating economic benefits/values”.
The process of brand valuation determines the economic (monetary) value of a brand. In economic terms, brands affect the demand and supply curves, and therefore create value. Looking at the demand side, a ‘branded’ product can be sold at a higher price, given a sales volume; while on the supply side, brands have the capacity to reduce operating costs and achieve economies of scale.
The origin of brand valuation dates back to the late 1980s when, during a series of acquisitions, it was revealed that the acquisition prices for strong brand companies were consistently higher than the value of their net intangible assets. Goodwill is the difference between market value and book value and includes various intangible assets, of which brand
is a major factor. (Salinas, 2011)
The two general categories of application of brand valuation are (Salinas & Ambler, 2009) :
In this section, we briefly discuss the approaches to brand valuation and the general methods used within each approach (Salinas, 2011) :
Cost Approach:
Under this approach, the cost of developing a brand (brand acquisition, creation, or maintenance) including its phases of development (testing, R&D, product improvements, promotions) is considered for brand valuation. The methods used under this approach are:
Market Approach:
This approach uses data from recent comparable transactions involving similar brands. The methods under this approach are:
Income Approach:
This approach uses the future income, profits or cash flows attributable to a brand to derive its brand value by discounting (using Discounted Cash Flow – DCF approach) or capitalizing them to present value. The most prevalent methods under this approach are:
REFERENCES
Salinas, G., 2011. The International Brand Valuation Manual: A complete overview and
analysis of brand valuation techniques, methodologies and applications. s.l.:John Wiley &
Sons.
Salinas, G. & Ambler, T., 2009. A taxonomy of brand valuation practice: Methodologies and
purposes. Jounal of Brand Management, 17(I), pp. 39-61.
Lack of access to reliable sources of finance has thwarted the growth of a large
section of the Indian population. Along with many government initiatives, a new class
of entrepreneurs are trying to meet this unmet demand by leveraging technology in
finance – FinTech.
The FinTech service has an opportunity to serve the large unbanked sector currently using costly informal sources of finance. The demand for fintech services has been aided by the encouraging stance adopted by the major stakeholders and initiatives by the Government like UPI, Bharat Bill Payment System, Jan Dhan Yojana, Aadhar, India Stack, Startup India Program, and tax reforms. Other initiatives like the introduction of RuPay cards, easing of startup listing norms, proposed norms of crowdfunding by SEBI and of using e-commerce in the insurance space by IRDA have provided a fillip to this sector.
India currently accounts for 3% of the global VC investments in fintech with an expected RoI of 29% (much higher than the global average of 20%). This has led to the proliferation of many firms offering the following major services
Payments: The adoption of smartphones and the launch of platforms such as UPI and BBPS are some of the factors promoting mobile payments in India.
Lending: Direct lending platforms by NBFCs, P2P lending, and crowdfunding are gaining traction with better offerings and easier application processes.
Wealth management: The rise of digital payments and ease of carrying out online transactions paves the way to a fully automated wealth management platform.
Blockchain: The transparency, authenticity, and traceability provided by blockchain technology has led to the funding for Bitcoin exchanges and growing adoption of Distributed Ledger Technology (DLT).
Credit Scores – About 335 million Indians are excluded from obtaining formal financing every year due to the unavailability of credit scores. Data sources like transactional data on E-commerce sites, social media behavior, and payment of EMIs can be used to derive credit ratings for urban borrowers. Internet penetration in rural areas raises data sources such as utility and mobile bills and internet browsing patterns. For marginal enterprises far more sensitive to the cost of capital, data like social media reviews and company’s usage of logistics firms can be used.
Feature phones – Feature phones still dominate the tier 2/3 cities, especially the low-income group. Exploiting the feature phone market thus becomes pivotal to attain the goal of financial inclusion and a few notable developments in this field are-
Raising capital through ICOs – Initial Coin Offerings (ICOs) is an alternative way of raising funds using cryptocurrencies in which organizations raise funds for their ideas from investors in exchange for tokens. Such token holders generally do not get voting rights that prevent equity dilution from the company’s perspective. The temporary nature of funds and fears of a bubble are some of the issues related to ICOs and thus regulatory bodies would have to play a pivotal role to safeguard the interest of all stakeholders.
Supply chain financing – Online platforms can take advantage of the buyers’ low credit risk to pay suppliers promptly, less a small discount, and later collect the entire amount from the buyer. The current atmosphere of low-interest rates, short periods of finance and using the credit risk of the buyer means unnoticeable discounts. This would help in freeing up working capital for both parties.
Regulatory sandboxes – The launch of a regulatory sandbox that temporarily relaxes some regulatory requirements to allow small-scale experiments on a control group can help assess the potential benefits and risks associated with such a product before launching it for all. After the prototype passes the initial test, it can be released to the mass market with all regulations.
Conclusion:
FinTech thus provides a low-cost and simple solution that can act as the behemoth of financial inclusion in India. Regulatory support, burgeoning start-ups, and a growing class of young digital literates are some of the factors that can boost investments and increase adoption of emerging technologies in this sector. A collaborative approach with all the stakeholders would help these players leverage authenticity and capital to expand their services and include the long left-out segments in the net of formal financial credit.
