Technology is disrupting the financial sector at an unprecedented pace. From bank transfers, to payments, to loans, each financial function today has a strong play of technology, with more scope for disruptions.
That startups are tapping into this potential is evident, especially from funding patterns.
The number of fintech startups funded in the first half of 2016 equals the total number of startups funded in the sector in 2015. According to YourStory Research, $1.2 billion has already been invested in fintech startups in the last two years.
Moreover, the government also seems to be taking notice of this space. The National Payments Corporation of India (NPCI) launched its interoperable payments system, Unified Payments Interface (UPI), earlier this year. Further, the RBI is looking to regulate the P2P lending platforms and get them to register as non-banking financial corporations (NBFCs).
With the buzz only rising, here are the top 13 fintech companies in terms of funding received in the last two years:
#1 Paytm
Parent Company: One97 Communications
Headquarters: Noida
Founding year: 2010
Founder: Vijay Shekhar Sharma
Area of operations: E-commerce, payment panks, and payments (wallet)
Total funding raised till date: More than $728 million
Key investors: ANT Financial, SAIF Partners, Intel Capital
Funding raised (as of 2015–16): $700 million
Funding highlights (as of 2015–16):
February 2015
In February 2015, Alibaba-backed Ant Financial Services Group and Paytm’s parent company One97 Communications announced an agreement which saw Ant Financial take a 25 percent stake in One97 to support the growth of its mobile payment and commerce platform in India.
However, a funding of $575 million was supposed to take place in two tranches. In March, One97 had raised $200 million and was supposed to meet the targets for the second one.
September 2015
Alibaba then entered the company to invest in the second tranche, along with Ant Financial (Alibaba’s payment arm).
However, Paytm put up a requirement of a bigger tranche and Alibaba Group agreed to pump in $500 million instead of $375 million, taking the total investment to $700 million.
This makes Alibaba Group the biggest stakeholder in One97 Communications, owning 40 percent of stake in the company.
Further, news came out in February 2016 that Paytm was looking to raise $400 million by June to help with the launch of Paytm’s new payments business, Paytm Payment Bank, although this wasn’t confirmed by the payment major.
#2 Freecharge
Parent company: Snapdeal (acquired on April 8, 2015)
Headquarters: Mumbai
Founding year: 2010
Founder: Kunal Shah and Sandeep Tandon
Area of operations: Mobile payments (wallet), recharges
Total funding raised till date: $120 million
Key investors: Hong Kong-based fund Tybourne Capital Management; SF-based fund Valiant Capital Management; Sequoia Capital, along with Sofina and RuNet
Funding raised (as of 2015–16): $80 million
Funding highlights (as of 2015–16)
February 2015
After five months of raising Series B, mobile payment platform FreeCharge had raised $80 million as part of Series C funding from investors including Hong Kong-based Tybourne Capital Management and SF-based Valiant Capital Management.
Existing investors Sequoia Capital, along with Sofina and RuNet, also participated in the round.
April 2015
In April, e-commerce marketplace Snapdeal acquired Freecharge for a cash-plus-stock deal, with the majority of it in stocks and only a small part in cash.
However, FreeCharge remains a separate entity from Snapdeal.
#3 MobiKwik
Parent Company: One MobiKwik Payments Systems Pvt. Ltd.
Headquarters: Gurgaon
Founding year: 2009
Founder: Upasana Taku and Bipin Preet Singh
Area of operations: Mobile payments (wallet)
Total funding raised till date: $85 million
Key investors: Japan’s payment gateway GMO; Taiwan-based semiconductor company MediaTek; Cisco Investments, American Express, Sequoia, and Tree Line Asia.
Funding raised (as of 2015–16): $75 million
Funding highlights (as of 2015–16)
April 2015 — Series B
In April last year, the company had raised over $25 million in multiple Series B tranches led by Tree Line Asia. Other investors in the round included Cisco Investments, American Express, and the existing investor, Sequoia Capital.
January 2016 — Series C
Early this year, MobiKwik had raised $50 million in a Series C round led by Japan’s payment gateway GMO, and MediaTek, a Taiwan-based semiconductor company. Existing investors Sequoia Capital and Tree Line Asia also participated in this round.
#4 BankBazaar.com
Parent company: A & A Dukaan Financial Services Pvt. Ltd.
Headquarters: Chennai
Founding year: 2008
Founder: Rati Rajkumar, Adhil Shetty and Arjun Shetty
Area of operations: Online marketplace for loans and insurance products
Total funding raised till date: $80 million
Key investors: Amazon India, Fidelity Growth Partners, Mousse Partners
Funding raised (as of 2015—16): $60 million
Funding highlights (as of 2015—16)
July 2015 — Series C
Financial marketplace BankBazaar had raised $60 million (INR 375 crore) in Series C funding from Fidelity Growth Partners and Mousse Partners. Existing investors Sequoia Capital and Walden International also participated in the funding round.
#5 Lendingkart
Parent company: Lendingkart Technologies Pvt. Ltd.
Headquarters: Ahmedabad
Founding year: 2014
Founder: Harshvardhan Lunia, Mukul Sachan
Area of operations: Online lending platform for SMEs
Total funding raised till date: $42 million
Key investors: Saama Capital, Mayfield Fund, India Quotient, Bertelsmann India Investments, Darrin Capital Management
Funding raised (as of 2015–16): $42 million
Funding highlights (as of 2015–16)
July 2015 — Series A
The platform for small business loans raised a Series A round of $10 million from Saama Capital, Mayfield Fund, angel investor Shailesh Mehta, and Ashvin Chadha.
June 2016 — Series B
Just last month, the firm announced raising $32 million (Rs 205crore) in Series B fundingfrom Bertelsmann India Investments (BII), with participation from Darrin Capital Management, India Quotient, and existing investors — Mayfield India and Saama Capital.
Out of the $32 million, $20 million was raised as equity and $12 million as debt.
#6 PolicyBazaar
Parent company: ETechAces Marketing and Consulting Pvt. Ltd.
Headquarters: Gurgaon
Founding year: 2008
Founder: Alok Bansal, Yashish Dahiya
Area of operations: Online lending platform for SMEs
Total funding raised till date: $69 million
Key investors: PremjiInvest, Tiger Global, Ribbit Capital, Inventus Capital Partners, and Intel Capital
Funding raised (as of 2015–16): $40 million
Funding highlights (as of 2015–16)
April 2015 — Series D
It was reported that the Gurgaon-based digital lending platform had raised $40 million in a round led by PremjiInvest, Wipro’s personal investment vehicle.
In March 2016, media reports emerged that PolicyBazaar’s parent company, ETechAces Marketing and Consulting, had reported a loss of Rs 71 crore.
#7 Vistaar Finance
Parent company: Vistaar Financial Services Pvt. Ltd.
Headquarters: Bengaluru
Founding year: 2010
Founder: Brahmanand Hegde and Ramakrishna Nishtala
Area of operations: Online lending to SMEs
Total funding raised till date: $76 million
Key investors: Elevar Equity, Saama Capital, WestBridge Capital, and Omidyar Network India Advisors
Funding raised (as of 2015–16): Rs 250 crore ($39 million according to the exchange rate then)
Funding highlights (as of 2015–16)
September 2015
Financial Services startup Vistaar Finance had raised an internal round of funding from existing investors WestBridge Capital, Omidyar Network, Elevar Equity, Saama Capital, and Lok Capital.
WestBridge Capital led the round, investing Rs 202 crore.
#8 Capital Float
Parent company: Zen Lefin Pvt. Ltd
Headquarters: Bengaluru
Founding year: 2013
Founder: Sashank Rishyasringa and Gaurav Hinduja
Area of operations: Digital lending platform for working capital finance to SMEs
Total funding raised till date: $42 million
Key investors: SAIF Partners, Sequoia Capital, Aspada, Creation Investments
Funding raised (as of 2015–16): $38 million
Funding highlights (as of 2015–16)
February 2015 — Series A
The Bengaluru-based company had announced raising $13 million in Series A financing to support its growth. The round was led by SAIF Partners and Sequoia Capital, with participation from existing investor Aspada.
May 2016 — Series B
The digital finance company announced raising $25 million in a Series B round which was led by Creation Investments Capital Management LLC. There was also participation from its existing investors Sequoia, Aspada, and SAIF Partners.
In the past three years, Capital Float has disbursed close to over Rs 250–300 crore and has over 1,000 customers in 40 cities across the country with interest on loan amount varying from 16 to 19 percent.
#9 IFMR Holdings
IFMR Holdings Finance Pvt. Ltd, run by the IFMR Trust
Headquarters: Chennai
Founding year: 2013
CEO of IFMR Holdings Finance Pvt. Ltd: Sucharita Mukherjee
Chair of IFMR Trust: Bindu Ananth
Area of operations: Financial inclusion
Total funding raised till date: $27 million
Key investors: Accion, LeapFrog Investments, Lok Capital, and Proparco
Funding raised (as of 2015–16): $26.8 million
Funding highlights (as of 2015–16)
August 2015
In August, the financial holdings platform in India raised $25 million in equity from Accion, a financial inclusion firm; LeapFrog Investments, an investor in emerging-market financial services; and Lok Capital, an Indian impact investment firm.
In this round of investment, Accion had put in $12.5 million, LeapFrog Investments spent $9 million, and Lok Capital invested $3.5 million.
At this point of time, IFMR Holdings claimed to serve millions of financially excluded households and enterprises through three businesses: IFMR Capital, IFMR Rural Finance, and IFMR Rural Channels.
March 2016
IFMR Holdings had secured $1.8 million (approximately Rs 12.5 crore) in a fresh round of funding from French development financial institution Proparco SA.
#10 Electronic Payments and Services
Parent company: Electronic Payments and Services Pvt. Ltd.
Headquarters: Mumbai
Founding year: 2014
Founder: Mamallan Mani
Area of operations: Payments, outsourcing ATM services to large banks in the country
Total funding raised till date: Over $36 million
Key investors: Apis Growth Fund, Aavishkaar, and Asia Participation BV
Funding raised (as of 2015–16): $25 million
Funding highlights (as of 2015–16)
January 2016
To fund the expansion of its ATM network and acquisition plans, payment services provider Electronic Payment and Services raised funding from UK-headquartered Apis Growth Fund for $25 million.
The company’s business was reported to grow from Rs 5 crore in revenue in 2013 to Rs 130 crore in revenue in 2016. The firm plans to take this number to Rs 1000 crore by March 2018 and plans to expand its services to the African markets.
#10 Mswipe
Parent company: Mswipe Technologies Pvt. Ltd.
Headquarters: Mumbai
Founding year: 2011
Founder: Manish Patel
Area of operations:Merchant acquirer and mobile POS solution provider
Total funding raised till date: Over $30 million
Key investors: Falcon Edge Capital, Matrix Partners India, Meru Capital, and DSG Consumers Partners
Funding raised (as of 2015–16): $25 million
Funding highlights (as of 2015–16):
July 2015 — Series C
In July 2015, MSwipe announced that it had closed its Series C funding of $25 million from participation from new investors Falcon Edge Capital, Ola Cabs, and Meru Capital, as well as existing investors Matrix Partners India, Axis Bank, and DSG Consumer Partners.
Then, Mswipe’s proprietary solutions were already in use with more than 25,000 merchants across India.
# 10 Citrus Pay
Parent company: Citrus Payment Solutions Pvt. Ltd.
Headquarters: Mumbai
Founding year: 2011
Founder: Amrish Rau, Satyen V Kothari, Jitendra Gupta
Area of operations: Mobile payments and payment gateway
Total funding raised till date: $32.5 million
Key investors: Sequoia Capital, Ascent Capital, BEENOS
Funding raised (as of 2015–16): $25 million
Funding highlights (as of 2015–16):
October 2015 — Series C
In October last year, payment solution company Citrus Payment raised about $25 million from existing backers Sequoia Capital, Ascent Capital econtext Asia, and BEENOS.
There are other notable companies in the space which picked up considerable funding last year. Missing the mark was Ezetap which raised 150 crore approximately $23 million) last year. There are also companies like ItzCash, which received a Rs 100-crore investment commitment from its promoter Ashok Goel, and Loylty Rewardz which raised Rs 120 crore in investment last July.
Clearly, payments and lending are two categories which have been top sellers in the fintech space. Over the past two years, there have been 23 payment companies (including mobile payments) and 26 lending firms which have been invested with more than a billion dollars in funding, says YourStory Research.
Another interesting investor which keeps popping up is Sequoia Capital, which has invested in mobile wallets Citrus Pay and MobiKwik as well as loan marketplace BankBazaar.com. There is also SAIF Partners which is investor to Paytm and Capital Float.
Therefore, it seems as if the investors have finally woken up to the potential of financial technology in India. Other technology sectors like banking, e-tax filing, and loyalty management, are also picking up in terms of investments.
Thus, 2016 will see the number of funding deals in alternate fintech technologies rising and matching up to the lending and payments space. This is because users are getting increasingly comfortable at using technology to automate mundane tasks such as task filing.
