On Wednesday, fintech platform for fast loans EarlySalary announced raising $4 million from IDG Ventures India (IDGVI) and Dewan Housing Finance Corp. Ltd. (DHFL) as a part of their Series A round of funding.
Speaking to YourStory, Co-founder and CEO Akshay Mehrotra said that almost 75 percent of the funds will be utilised for building their lending book. The remaining amount will go into expanding their team, with a specific focus on machine learning skill sets, and helping grow the customer base.
Started in 2015, the Pune-based NBFC focuses on providing instant cash and short-term loans to young working professionals in the country. Their current product is a 30-day unsecured loan ranging in value between Rs 8,000 and Rs 100,000.
According to Akshay, 83 percent of their customers are from IT companies, earning an average salary of Rs 39,500. Further, 35 percent of their customers are new to the concept of credit and are first-time loan takers.
The founders also claim that their proprietary tech allows them to issue loans at a fast pace, stating that almost 70 percent of their loans are given in under 10 minutes.
The firm had earlier raised seed funding from Ashok Agarwal of Transcorp International.
Speaking on the investors, Akshay said,
We are very excited to have IDG Ventures India and DHFL onboard as investors, and this combination and capital will provide the necessary growth impetus and management depth needed to accelerate growth and the innovation process at EarlySalary.
While commenting on the investment, Karthik Prabhakar, Director, IDG Ventures India Advisors, said,
”We believe fintech firms are changing the way India will bank, and EarlySalary’s capability of using social media-based underwriting decision making will help many young working professionals get access to credit, which is otherwise not possible. This will, over a period of time, create a wealth of information on creditworthy customers, to offer more diverse products through partners.”
At present, the firm has close to 40 members, which it plans to ramp up to 55. According to their press statement, the company has distributed more than 15,000 loans to 5,000 customers. With this fresh infused funding, EarlySalary is aiming to take this number to 200,000 loans across 50,000 customers by the end of this fiscal year, says Akshay.
In the future, the company is planning to build a hybrid tech model that would leverage capabilities of unstructured and structured data formats. It is also planning to release its own credit line, to be used across multiple use cases like travel and healthcare. Companies like MoneyTap and AffordPlan are already making a foray into this space.
However, the founders are clear that the current model will continue to be a major focus for the company. EarlySalary remains positive that, over the course of this year, it can build a monthly lending book of close to Rs 100 crore.
The firm charges an average of 2.7 percent on a monthly basis for the loans taken, and claims to be cheaper than a credit card.
There are other startups in the market working on the model of payday loans, including names like Buddy India, InstaPaisa, and ReBase, among others.