A one-time Rubik’s Cube world champion is pictured solving the puzzle. (Photograph: Mark H. Milstein/Bloomberg)

Fintech Startup Rubique Plans To Raise $20 Million

Online lending marketplace Rubique is looking for investors for its third round of funding through which the startup aims to raise as much as $20 million (close to Rs 130 crore).

The fund-raise is expected to be concluded by October, Managing Director and Chief Executive Officer Manav Jeet Singh told BloombergQuint in an interview.

So far, the Mumbai-headquartered company has raised $7 million, $1.5 million of which was seed capital invested by the promoters at the start, Singh said. Investors at this point include Kalaari Capital, Globevestor, and YourNest Angel Fund.

During its three years of operations, the company has facilitated loan disbursements of nearly Rs 2,000 crore, two-thirds of which have been to small and medium enterprises (SME).

The Rubique Model

“I’ve been a banker for more than 20 years,” said Singh. “I always believed that for every borrower there is a lender somewhere and vice versa.” But Rubique’s model, he stressed, is different from loan aggregators like Bankbazaar, as its focus is more on completing loan disbursement and not on generating leads.

Five-seven years back, the aggregator model was relevant, because you wanted leads and that was an important part of the business... customers are not just looking for information. They are looking to transact. We realised that if a customer is only a lead, you may not be able to help them. So, we wanted to hand hold the customer from end to end.
Manv Jeet Singh, MD & CEO, Rubique

The process followed by Rubique is governed by the type of borrower. After a retail borrower logs on and provides required information on the Rubique website or mobile application, Rubique’s algorithms go to work, mapping the borrower’s details with over 220 credit policies from banks and non-banking financial companies.

Each of these credit policies corresponds with a loan product from one of the more than 70 financial institutions that have partnered with Rubique. As many as 140 self-learning algorithms are currently up and running, Singh said.

Once a match is found, the details are sent to the financial institution and an in-principle approval of the loan is taken. Then, one of Rubique’s business associates helps the borrower complete the documentation that is required by the regulator.

For SMEs, the process is very different, since most of them are unlikely to go online seeking a loan.

“We have what is called the Rubique Tab. Our chartered accountant partners have this Tab, and sit across the table with the SMEs and fill out their details. The outcome of that is a credit assessment memo, which is electronically transferred to the lender,” said Singh. He claims that this significantly reduces the time taken to disburse a loan.

How Does Rubique Make Money?

The company’s primary source of revenue currently is a percentage of the loan principal.

“It varies between 150 basis point to 300 basis points of the principle amount, based on the product and the financial institution that we’re working with,” said Singh. “So secured loans would be a smaller percentage, close to 150 basis points. But, an unsecured loan would have a larger quantum. SMEs vary between 150-175 basis points.”

Rubique is currently generating monthly revenue of Rs 2.5 crore, and this will grow with the disbursements. Last financial year, the company generated loan disbursements of Rs 1,000 crore. This year, the company generated half that amount in the first four months, said Singh.

BloombergQuint could not independently verify these numbers.

Is The Model Feasible?

The fact that Rubique provides an end-to-end solution makes it an interesting prospect for many banks and financial institutions, according to Rajiv Anand, executive director retail banking at Axis Bank Ltd.

“Banks that don’t have the distribution capability that we do will find this useful. Having said that, ultimately as a bank, I would certainly want to know my customer, and would not want to abdicate that responsibility to a fintech,” said Anand.

Further, Anand pointed out that as important as lead generation and loan disbursal is the collection of the loan.

“I don’t mean that the loans will become NPAs (non-performing asset). But, you must follow up with the customer. That’s a very important component,” he said.

This may not be as critical in the retail space, because especially for loans to salaried borrowers, monitoring salary payments is broadly sufficient. However for SMEs particularly, multiple aspects like inventories and cash flows must be monitored regularly.

What’s Next For Rubique?

The company plans to use a bulk of the proceeds from the upcoming round of funding for talent acquisition, building infrastructure, and on marketing spends.

“We’ve gotten approval from IRDAI (Insurance Regulatory and Development Authority of India) for insurance, so that is a vertical that we’re adding. Plus we’re adding mutual funds as a product line,” said Singh.

If all goes to plan, Rubique will break even towards the end of 2018, he added.