Moneycontrol Startup Conclave: AI valuations are definitely overstated, says PhonePe CEO Sameer Nigam on...

Moneycontrol Startup Conclave: AI valuations are definitely overstated, says PhonePe CEO Sameer Nigam on AI hype

Artificial intelligence is not being overhyped, but the valuations of companies operating in the space are definitely overstated, according to PhonePe co-founder and CEO Sameer Nigam.

Speaking at the third edition of the Moneycontrol Startup Conclave, Nigam said AI valuations in the private market could undergo a correction, as public markets compare companies across industries.

"AI is not overstated. But the valuation is definitely overstated," he said. "The valuation will readjust. In private markets, you get a premium for the market leader. But public markets compare across the industries," Nigam added.

On the future of AI, Nigam said the next wave of users could come through voice-based AI agents that can interact in vernacular languages.

"The next set of users will come through an agentic speech experience in vernacular language," he said.

While search has played a foundational role, Nigam said AI companies would not necessarily replace established businesses across sectors.

"While search was foundational. But a Myntra won't be replaced by an AI company," he said, adding that PhonePe would also make some foundational bets in the space.

Nigam said society often creates barriers that slow the pace of innovation, but the development of new ideas should accelerate over the next decade.

"We create unnatural barriers at a society level. The acceleration of idea should happen much quicker in the next decade," he said.

PhonePe's growth and payments opportunity

Nigam said PhonePe continues to operate like a startup, despite its growth in the digital payments market.

"We still operate as a startup," he said.

"Ten years ago if you told us if we were going to be the largest real time payments in the world, we would not have believed it," he added.

However, he said India's payments market still has significant room to grow, with another 500 million users yet to join the network.

"Payments still have a long way to go. Another half billion users are outside the network," Nigam said.

He also expressed his ambition to see an Indian product company expand globally.

"We want to see a home grown product company go global," he said.

PhonePe targets 100x growth in financial services

Nigam said PhonePe is rapidly expanding its insurance business, with a focus on building a transparent, low-cost digital insurance platform.

"We are aiming for 100x growth in financial services," he said.

He added that the company's original mission was to reach a billion users and that it now has a sustainable model to scale its business.

"The mission was to reach a billion users. There is now sustainable model to scale. It will change the math and will help us build better bottomline," Nigam said.

On lending, Nigam said PhonePe had deliberately entered the segment later, choosing to focus on building a sustainable business first.

"We are focusing on lending and we were late by design. We wanted to be sustainable first," he said.

He added that the company is building data, collection and distribution capabilities to expand its financial services business.

"We are putting data, collection and distribution engines to grow the vertical," Nigam said.

Merchant business and valuation reset

Nigam said PhonePe had moved as quickly as possible in merchant acquisition and remained confident about the opportunity in the segment.

"We couldn't have gone sooner in merchant acquisition any faster. We are happy with the expansive play here," he said.

Commenting on the valuation correction among startups, Nigam described the reset as cyclical and linked it to capital moving towards the US market.

"The valuation resetvwas cyclical at large. The startups that listed has seen compression in multiples because of capital flight to US/New York," he said.

He also noted that mutual funds are looking for a sustainable path to net profitability. "Mutual funds want a sustainable net profit path," Nigam said.

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