Invest in Economy

On first impression, “sharing economy” seems like one of the many buzzwords that the rise of technology has spawned. However, the last few years have made it clear that it is no longer just jargon that’s being thrown around, but a way of life that’s here to stay. If you’ve recently hailed an Uber, stayed at an Airbnb or sold your old furniture on OLX, then you’ve benefited from it. However, that’s not the only way to maximise your gains in a sharing economy.

Sharing is the Future
The sharing economy is not without its disadvantages. However, the pros not only outweigh the cons, but also align with our current financial, social and environmental needs. After all, its rise has let people enjoy the same lifestyles at lower prices, in addition to empowering the common man by adding new, more flexible sources of income. Moreover, the increased access to capital has created a plethora of opportunities, dispelling the myth that making money is the right of the wealthy elite.

It’s no surprise, then, that the phenomenon has seen a remarkable growth in recent years, with the Bank of America Merrill Lynch (BofAML) predicting that the global sharing ecosystem will eventually be worth $2 trillion. This is especially good news for India, where per capita ownership of assets like vehicles is fairly low, and where these businesses are still at a nascent stage.

How Can Investors Get in on This?
Investing in these ventures may seem like the most straightforward way to benefit from the sharing economy. Unfortunately, though, most of them are privately owned. An obvious workaround to this has been using these platforms as a source to generate another stream of revenue. Enterprising individuals have made the most of them by selling their wares, or putting spare vehicles, homes and even rooms to good use. While this may be a viable source of income for those who do have the assets – or the means to purchase them – at their disposal, it has still kept a sizeable portion of the population from reaping the benefits of the sharing economy.

One area of India’s sharing economy where investors are reaping benefits is the peer-to-peer lending sector. The rapid growth of this form of lending has been instrumental in empowering people by granting access to funds, in addition to letting lenders put dormant assets to good use. And though apprehensions were high when the RBI laid down stricter guidelines for lending activities, the regulation has been a boon that has helped weed out unsavory elements from the market.

If you do choose to go the way of P2P lending, make sure you start small and understand what you’re getting yourself into. Research the different platforms facilitating this service, to confirm that the one you choose has the green light from the RBI, in addition to a lucrative ticket size. Additionally, don’t forget to compare them on parameters like defaulter rate, risk appetite, and borrower profiles among others.

What Does the Future Hold?
As India’s sharing ecosystem grows, expanding beyond tier-I & II cities, investors would be well-advised to keep their eyes on some of the key players driving this change. This is especially important for businesses that are poised to go public in the near future.

Until then, experts are betting big on “sharing-adjacent” companies and industries that are gradually expanding their exposure to the sharing economy. One great example is Amazon, which the BofAML has cited as having “medium exposure” as a platform, owing to its cloud offerings.

Like investing at large, taking a future-focused approach will get you far in the sharing economy. Just stay vigilant, be patient, and set realistic expectations, to help you tap into the vast potential of the sector!