Tag: Zestmoney

Posted on

ZestMoney founders resign as Goldman Sachs-backed fintech struggles to raise funds

Founders of ZestMoney have resigned from the startup, the latest twist in the fate of the Indian fintech whose ability to underwrite small ticket loans to first-time internet customers once drew the backing of many high-profile investors including Goldman Sachs.

Lizzie Chapman, Priya Sharma and Ashish Anantharaman, the founders of ZestMoney, informed employees about their decision on Monday.

“Over the last few weeks, we have done a lot of thinking and it has been hard for us to arrive at this conclusion,” wrote Chapman in an email seen by TechCrunch. “We have immense belief and faith in the potential that ZestMoney has. We will also ensure to provide full support to the incoming management team and do everything we can to support them for the next 4 months to ensure a smooth transition.”

The departures come weeks after a potential deal to acquire ZestMoney by PhonePe fell through.

“We are proud of how far we have come on that journey and the advancement we made in truly democratizing credit availability in the country using our path-breaking technology. We are also immensely proud of the incredible team and the unique culture we have built at ZestMoney – which was only underlined to us in recent weeks as we saw how everyone came together in supporting each other during one of the hardest times a startup can go through,” wrote Chapman.

More to follow.

ZestMoney founders resign as Goldman Sachs-backed fintech struggles to raise funds by Manish Singh originally published on TechCrunch

Posted on

Indian buy now, pay later startup ZestMoney raises $50 million from Australia’s Zip

ZestMoney, a Bangalore-based buy now, pay later platform, said on Wednesday it has raised $50 million in a new financing round from Australia’s Zip as the Indian firm looks to double down on a trend that has show early signs of traction in several global markets.

The eight-year-old Australian firm, which has a presence in 12 markets across five continents, is acquiring a minority stake in ZestMoney as part of the new Series C financing round, the two said.

ZestMoney said in a statement the new financing round hasn’t closed as existing investors will be participating in it as well. The startup, which has raised over $110 million to date, counts Goldman Sachs, Quona Capital, PayU, and Xiaomi among its early backers.

The buy now, pay later market remains at a nascent stage in India, where only a fraction of the population has a credit card. But a handful of startups including ZestMoney, Capital Float, and LazyPay are beginning to show traction in a market largely dominated by traditional giant Bajaj Finance.

The low penetration of credit cards in India has meant that very few people in the nation have a traditional credit score that banks heavily rely on to establish one’s credit worthiness before issuing them a loan. Moreover, small loans don’t generate lucrative returns for banks, giving them less incentive to write such cheques.

Image credits: Bernstein Research

ZestMoney says it assesses other data points and uses AI to help these people build a profile and become credit-worthy.

The startup, which said it has amassed over 11 million users and has 25 banking and non-banking financial partners, works with large merchants such as Amazon, Flipkart, Google Pay, and Xiaomi to offer its BNPL services to customers. ZestMoney has presence across over 75,000 physical stores and more than 10,000 online sites, it said.

The startup’s offering starts at as low as 50 Indian rupees (68 cents) to $6,777 and the duration of the payback period ranges between a month to two years.

“This is a deep validation of our position as market leader in the Buy Now Pay Later category in India. The shift towards Pay Later solutions is a global phenomenon and represents young digital consumers looking for transparency, honesty and no hidden charges in financial products,” said Lizzie Chapman, co-founder and chief executive of ZestMoney, in a statement.

“We believe India will leapfrog traditional products like credit cards, along with many other emerging markets, going straight to digital payment solutions. Over the last year we have seen applications for BNPL go up by 5X on our platform. We continue to invest in deepening partnerships with our merchant network and hiring the best talent. We strongly believe India will emerge as the largest BNPL market in the world over the next 5 years.”

Posted on

Indian tech startups raised a record $14.5B in 2019

Indian tech startups have never had it so good.

Local tech startups in the nation raised $14.5 billion in 2019, beating their previous best of $10.5 billion last year, according to research firm Tracxn .

Tech startups in India this year participated in 1,185 financing rounds — 459 of those were Series A or later rounds — from 817 investors.

Early stage startups — those participating in angel or pre-Series A financing round — raised $6.9 billion this year, easily surpassing last year’s $3.3 billion figure, according to a report by venture debt firm InnoVen Capital.

According to InnoVen’s report, early stage startups that have typically struggled to attract investors saw a 22% year-over-year increase in the number of financing deals they took part in this year. Cumulatively, at $2.6 million, their valuation also increased by 15% from last year.

Also in 2019, 128 startups in India got acquired, four got publicly listed, and nine became unicorns. This year, Indian tech startups also attracted a record number of international investors, according to Tracxn.

This year’s fundraise further moves the nation’s burgeoning startup space on a path of steady growth.

Since 2016, when tech startups accumulated just $4.3 billion — down from $7.9 billion the year before — flow of capital has increased significantly in the ecosystem. In 2017, Indian startups raised $10.4 billion, per Tracxn.

“The decade has seen an impressive 25x growth from a tiny $550 million in 2010 to $14.5 billion in 2019 in terms of the total funding raised by the startups,” said Tracxn.

What’s equally promising about Indian startups is the challenges they are beginning to tackle today, said Dev Khare, a partner at VC fund Lightspeed Venture Partners, in a recent interview to TechCrunch.

In 2014 and 2015, startups were largely focused on building e-commerce solutions and replicating ideas that worked in Western markets. But today, they are tackling a wide-range of categories and opportunities and building some solutions that have not been attempted in any other market, he said.

Tracxn’s analysis found that lodging startups raised about $1.7 billion this year — thanks to Oyo alone bagging $1.5 billion, followed by logistics startups such as Elastic Run, Delhivery, and Ecom Express that secured $641 million.

176 horizontal marketplaces, more than 150 education learning apps, over 120 trucking marketplaces, 82 ride-hailing services, 42 insurance platforms, 33 used car listing providers, and 13 startups that are helping businesses and individuals access working capital secured funding this year.

The investors

Sequoia Capital, with more than 50 investments — or co-investments — was the most active venture capital fund for Indian tech startups this year. (Rajan Anandan, former executive in charge of Google’s business in India and Southeast Asia, joined Sequoia Capital India as a managing director in April.) Accel, Tiger Global Management, Blume Ventures, and Chiratae Ventures were the other top four VCs.

Steadview Capital, with nine investments in startups including ride-hailing service Ola, education app Unacademy, and fintech startup BharatPe, led the way among private equity funds. General Atlantic, which invested in NoBroker and recently turned profitable edtech startup Byju’s, invested in four startups. FMO, Sabre Partners India, and CDC Group each invested in three startups.

Venture Catalysts, with over 40 investments including in HomeCapital and Blowhorn, was the top accelerator or incubator in India this year. Y Combinator, with over 25 investments, Sequoia Capital’s Surge, Axilor Ventures, and Techstars were also very active this year.

Indian tech startups also attracted a number of direct investments from top corporates and banks this year. Goldman Sachs, which earlier this month invested in fintech startup ZestMoney, overall made eight investments this year. Among others, Facebook made its first investment in an Indian startup — social-commerce firm Meesho and Twitter led a $100 million financing round in local social networking app ShareChat.

Posted on

Goldman Sachs leads $15M investment in Indian fintech startup ZestMoney

One of America’s largest banks has just poured some money to help millions of Indians without a credit score secure loans and make purchases online for the first time in their lives.

Bangalore-based ZestMoney announced today it has raised $15 million from Goldman Sachs and existing investors Naspers Fintech, Quona Capital, and Omidyar Network. Lizzie Chapman, co-founder and chief executive of ZestMoney, told TechCrunch in an interview that the new investment is part of an extended Series B round, the first tranche of which it announced in April this year.

The extended Series B round brings ZestMoney’s total raise to-date to $63 million, she said.

The penetration of credit cards remains very low in India; roughly three in 100 people in the country have a credit card. This has meant that very few people in the nation have a traditional credit score, which banks heavily rely on to establish one’s credit worthiness before issuing them a loan.

Moreover, small loans don’t generate lucrative returns for banks, giving them less incentive to write such cheques. In recent years, a growing number of Indian startups has stepped in to address this void.

ZestMoney assesses other data points and uses AI to help these people build a profile and become credit-worthy. The startup has partnered with over 3,000 merchants (up from some 800 in late April), including Flipkart, Amazon, and Paytm, to offer financing options at point-of-sale.

It has amassed more than 6 million users, who can access credit of $140 to $3,000. To make the deal even better, many of these merchants offer interest-free option to customers, provided they could pay back in a specified amount of time.

The startup, which has partnership with nearly every online payments processor including Razorpay, BillDesk, Cashfree, CCAvenue, and PayU, has also made a push in the brick and mortar market by inking deals with Chinese smartphone maker Xiaomi, and Pine Labs, which has over 300,000 point-of-sale machines across the country.

ZestMoney has also raised an unspecified amount of debt, which it uses to finance the credit to customers. It recently entered in a strategic partnership with Credit Saison, a Japanese financial services company affiliated to Mizuho Financial Group, to deploy $100 million towards expanding digital lending in the country.

Philip Aldis, a managing director at Goldman Sachs, said its investment in ZestMoney would enable more households in India to access credit. “We look forward to leveraging our global experience and network for the continued growth of ZestMoney,” he said.

Goldman Sachs has invested in a handful of startups in India, including logistics startup BlackBuck, home rental platform NextAway, news aggregator DailyHunt, and online furniture store PepperFry.

The New York-headquartered firm, which is one of the world’s largest trading banks, has also invested in a number of financial startups including NuBank, a Brazilian startup that offers digital credit card to smartphone users. It is also the banking partner for Apple Card.

ZestMoney aims to disburse credit of worth $1 billion in 18 months. The startup says it aims to reach 300 million users one day.

Posted on

Xiaomi launches app to offer credit to millennials in India

Xiaomi, the top smartphone vendor in India, today joined a growing wave of fintech startups in the nation that are offering credit to aspirational young professionals and millennials.

The Chinese electronics giant said today it is launching Mi Credit, its curated marketplace for digital lending, that offers users credit between Rs 5,000 ($70) and Rs 100,000 ($1,400).

Xiaomi said it has partnered with a number of startups such as Bangalore-based ZestMoney, CreditVidya, Money View, Aditya Birla Finance Limited, and EarlySalary to determine who should get a credit and then finance it.

Users are required to let Mi Credit app access their texts and call logs to look for transactional information and some other details to assess whether they are credit worthy. This whole process takes just a few minutes and eligible users can walk out with some credit, said Manu Jain, Vice President of Xiaomi, at a conference in New Delhi.

He added that having multiple partners for the crediting platform ensures that the likeliness of a user securing a loan is high. Once a user has secured a credit from the app, they can avail more credit in the future with a single click, the company said.

For startups that have partnered with Xiaomi, the big draw is access to a large user base, an executive with one of the partner startups told TechCrunch.

Xiaomi, which has been the top smartphone vendor in India for nine consecutive quarters, has an install base in tens of millions in the country. The company has shipped more than 100 million smartphones in the country, it recently revealed.

Xiaomi said the Mi Credit app will be preinstalled on all Xiaomi smartphones running Android -based MIUI operating system. The app is also available for non-Xiaomi Android smartphone users from the Google Play Store. (It’s not available for iPhone users.)

A wave of fintech firms have emerged in recent years in India to help millions of users secure credit and other financial services for the first time in their lives. The penetration of credit card remains very low in the country (roughly three in 100 people in India have a credit card.) This has meant that very few people in the nation have a traditional credit score.

This void has created an immense opportunity for startups to explore a range of other data points to determine who should get a loan. In emerging markets such as India, where the laws are lax, nobody appears to be alarmed with the idea of a company gleaning a lot of personal details.

As of today, Mi Credit is available to users in 1,500 zip codes, or 10 states in India. The company said it plans to extend the credit service to all of India by March next year.

Partner startups involved declined to comment on the financial arrangement they have with Xiaomi. The aforementioned unnamed executive said the agreement would vary with partners and the kind of product they are bringing to the table.

Xiaomi said it has deeply integrated its partners’ offerings into the app. As a result, users are able to see details such as disbursement of loans, lower interest, and credit score in real time.

The company began testing the app with some users in India last month. During the trial, it disbursed loans of over 280 million Indian rupees ($3.9 million).

For Xiaomi, the new offering would help it make its services ecosystem more engaging to consumers. The company, which recently posted one of its slowest growing quarterly reports, has been attempting to cut its reliance on hardware products and make more money off its internet services and through ads.

In March this year, Xiaomi launched Mi Pay, a UPI-powered payments app, in India. The company said the app has already amassed over 20 million registered users in the country.

Hong Feng, co-founder and senior vice president of Xiaomi, said the company understands the consumption behaviour of its 300 million users. “It is one of the strengths we aim to leverage to build a stronger Mi Finance business globally. We see a huge opportunity for consumer lending in India with estimations reaching up to $1 trillion dollars in digital lending by 2023, as per a report from BCG. This makes us believe that our Mi Finance business, based on solutions such as Mi Pay and Mi Credit can truly revolutionise the Indian FinTech industry.”