Capital Float, an Amazon-backed startup that offers its buy now, pay later service on many popular online platforms in India, including that of the e-commerce company, said on Tuesday it had raised $ 50 million in a new investment following strong growth in recent quarters.
Lightrock India led the new investment in the Bangalore-based startup, bringing the company’s historic seven-year increase to over $ 600 million (more than half of which is in debt). Existing investors Sequoia Capital India, Ribbit Capital, Creation Investments as well as leading entrepreneurs David Vélez of Nubank, Kunal Shah of CRED and Amrish Rau of Pine Labs also participated in the new round.
Capital Float reaches its clients through partnerships with other companies. It is a loan partner for many popular online platforms including Amazon India, online learning service Unacademy, airline Spicejet, direct-to-consumer electronics and lifestyle brand MakeMyTrip. Their customers can make their purchases via a loan at the time of payment, explained Sashank Rishyasringa, co-founder of the startup, in an interview with TechCrunch.
The startup also has partnerships with payment company Razorpay to reach small and medium-sized businesses and with Walnut to offer personal finance to customers.
Capital Float has accumulated over 2.5 million clients. These customers, who make more than 2 million purchases per month, use the service to fund more than $ 271 million per year, the startup said. During the year, the start-up mainly focused on the online space, said Rishyasringa.
“Our customer base has more than quadrupled in the past 12 months, and our collection efficiency was still over 95% during this time when many other businesses were experiencing a decline,” he said.
The market for buy it now and pay it back is still in its infancy in India, where only a fraction of the population has a credit card. But a handful of startups, including Capital Float, ZestMoney, and LazyPay, are starting to prove themselves in the market.
The low penetration of credit cards in India means that very few people in the country have a traditional credit rating that banks rely heavily on to establish their creditworthiness before granting them a loan. In addition, small loans do not generate lucrative returns for banks, making them less likely to write such checks.
Today, half of Capital Float’s user base does not have a credit card, Rishyasringa said. Capital Float, unlike many other Buy It Now, Pay On Services services, is a fully regulated entity. This means that the business must report user transactions to the credit bureaus, helping them build their credit score profiles.
The startup subscribes to each client using a range of signals. The subscription takes place “in two clicks and five seconds,” he said.
“Capital Float has solved the unique triumvirate of customer experience, risk management and merchant partnerships that is at the heart of opening the BNPL opportunity in India. In addition to its strong technology platform, it has set up a sophisticated underwriting and collection capability, as well as an ethical lending guide, which makes the model very compelling, ”said Saleem Asaria, partner at Lightrock India. , in a press release.
“We have also been consistently impressed with the team’s tenacity and focus on execution throughout a full credit cycle. We are excited to be working with the team to create a highly scalable, differentiated and sustainable business that will positively impact the lives of millions of customers in India through digital credit and financial products. “
The new capital, Rishyasringa said, will help the startup cope with the meteoric growth it has seen in recent months. He attributed much of this growth to the pandemic, but also noted that there are underlying long-term changes in consumer behavior that have helped the startup make bigger inroads.
The startup, which finances the loans through a partnership with banks such as Kotak and YBL, is also considering expanding its partner, he said.
“Most importantly, we see an opportunity for exponential growth from now on. By solving affordability as well as convenience, in a fully regulated format, we believe our BNPL approach can responsibly extend access to credit to over 100 million customers who are starting to transact online. We are privileged to have the support of our investors in pursuing this vision, and we are delighted to be working in partnership to build a world-class digital financial institution for India, ”said Rishyasringa and the other co- founder of Capital Float, Gaurav Hinduja. in a joint statement.