Bengaluru-based digital lending startup ZestMoney has raised $20 Mn in a fresh funding round led by Washington DC-headquartered fintech investor Quona Capital, with participation from Australian fintech investor Reinventure and existing investors such as Ribbit Capital, Omidyar Network and PayU.
The company plans to use the funds towards technology and data science for expanding acceptance of ZestMoney as a digital payment instrument (online and in-store), as well as enhancing product capabilities, and acceptability. ZestMoney is also looking to deepen integration with partner NBFCs and online retailers with whom it offers EMI options to customers.
Founded in 2015 by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman, ZestMoney enables instant account opening and real-time credit approval, combined with digital loan servicing and repayments technology.
“Quona and Reinventure are both specialist fintech venture funds. There’s definitely a lot of momentum in our space right now, with everyone in ecommerce talking about affordability through EMI and we’re just riding off the back of that,” said Chapman.
Prior to this round, the company had raised $21.9 Mn in funding, with its last infusion of $4.2 Mn in debt coming from Alteria Capital.
ZestMoney has partnered with with over 800 merchants such as Amazon, Flipkart, Xiaomi, myntra, Makemytrip and Pepperfry, wherein customers can purchase items and pay in digital EMI, without the need of a credit card or a credit score. Talking to Inc42, Chapman emphasised on the growing EMI market in India and the possibilities of growth in the space.
With 4.5 Mn customers, which are growing 20% M-o-M, ZestMoney is also focusing on offline growth through in-store partnerships. Chapman also shared that with virtual credit card and EMI financing in place at ZestMoney, the company may also add loyalty coins etc to further boost the customer growth.
Going forward, the company may also expand into healthcare and travel market with its financial offerings as Chapman says it would be a new market for ZestMoney.
The company also has international expansion on the cards, but not right now, however, it has opened an office in Singapore as it begins to assess expansion opportunities in the Southeast Asian region. Chapman emphasised that India is still a very large market for EMI opportunities and therefore, they continue to focus on the segment.
In the terms of financials, Chapman shared that the company has grown 3x in FY18.
ZestMoney had earlier acquired artificial- intelligence-as-a-service platform PhotographAI for an undisclosed amount. Bengaluru-based PhotographAI offers computer vision tools that can recognise objects in images.
Consumer Lending In India
As the country which has relied on moneylenders and cash for day-to-day financing needs as well as loans, digital access has given an edge to fintech startups. It has helped them reach remote areas and enable lending, payments etc.
A 2018 BCG report says that the country’s digital lending market has the potentialto become a $1 Tn (INR 71 Lakh Cr) opportunity in the next five years. Of this, personal lending is estimated to grow to a $50 Bn market, growing at a rate of 30% every year.
In the age of digital lending, players such as LoanTap, Credy, EarlySalary, Qbera, PaySense, i2iFunding etc enable B2C i.e. customer loans.
Recently, Pratish Gandhi, cofounder of Credy told Inc42 that the Bengaluru-based full-stack consumer lending company Credy has raised an undisclosed amount in a Pre-Series A round of funding.
Prior to this, in January, Pune-based online lending startup LoanTap raised $8 Mn(INR 57.9 Cr) from a combination of debt and equity for its fifth funding round which was led by early stage venture capital fund 3one4 Capital. provider PayU, after selling an undisclosed stake.
Inc42 in its Annual Tech Startup Funding report 2018 noted that fintech startups raised $1.4 Bn across 121 deals in the year with top-five funding grossers being PolicyBazaar, Pine Labs, LendingKart, PhonePe and ClearTax.
Further, Inc42 DataLabs noted that lending tech is gaining ground and became the third most significant sectors in terms of funding with LendingKart securing $87 Mn and Incred securing $41.9 Mn in the round.