Startup Street: The Startup Catering To Credit Needs Of India’s GenZ
Here’s what went on this week on Startup Street.
This week on Startup Street, we have a fintech startup serving the credit needs of India’s GenZ and Millennials. Meanwhile, Indian space technology startup Pixxel raised a round of seed funding. And Maruti Suzuki has joined hands with the startup hub and incubation centre at the Indian Institute of Management Bangalore to spearhead innovations in the mobility space. Here’s what went on.
Slice Of India’s Credit Pie
Anoop, a game tester in Bengaluru found himself in a spot of bother when the lockdown hit. Three of his flatmates were not drawing salaries, leaving the financial burden largely on him and a fifth flatmate. At a time when credit was a necessity for the 25-year old, a fintech startup born in the city itself, came to his rescue.
Founded in 2016, Slice is offering an “alternative to traditional credit cards” - with a limit as low as Rs 10,000 - to graduates and new entrants in the job market. Rejected by banks for loans himself when he was 22 years old, Founder and Chief Executive Officer Rajan Bajaj has created a market for his product in a section which is often rejected by larger financial institutions for credit facilities.
"This customer segment is very responsible and very educated. And we are educating them further to mold better spending habits," Bajaj told BloombergQuint over a telephonic conversation.
"They are the socio-economic fabric of our nation, they are the future. Yet they are ignored by financial institutions because all they see is risk, not potential."
Asked about the risk factor and the intention of repayment in the 18-29 age group (GenZ and millennials), Bajaj said the fintech startup's non performing assets were merely 3% of its total credit book - a bad loan rate lower than a large number of Indian banks.
As the company expands, it is taking steps to maintain this ratio by turning the service an 'invite only' option. The referral method lowers the risk of credit fraud and is an automatic filter to acquire the demographic the startup is looking for - educated and relatively well off. This is followed by additional levels of background checks including college education, and spending habits to assess credit worthiness, Bajaj said.
"Even before we made it a referral-only service, 70% of our customers were acquired that way," he said.
The company expects to reach the 10 lakh customers mark in the next year.
Speaking about the impact of the pandemic on the startup, Bajaj said consumption dropped 70% in April. While it has recovered to 80% of what it was pre-covid, he does not expect it to reach 100% anytime soon. But, where he's losing out on revenue in merchant fees or interest payments, he's making up for it by aggressively adding more customers.
The startup reported a revenue run rate of $10 million, or around Rs 75 crore at the current exchange rate, in financial year 2019-20. It said it expects its bottomline to increase threefold this year, but did not disclose last year’s profit.
Indian Space Tech Startup Pixxel Raises Rs 37 Crore In Seed Funding
Indian space technology startup Pixxel on Wednesday said it has secured Rs 37 crore in seed round funding led by Blume, growX and Lightspeed. The company plans to use the funds to develop its first satellite, which is expected to be launched later this year, and to accelerate development of a second satellite.
Pixxel is planning to make and launch a constellation of 30 satellites between December 2022 and June 2023.
"We have been able to manage a seed fund of $5 million (about Rs 37 crore ) from Blume venture, Lightspeed and growX venture. There is a follow-up investment from growX and Invendus Capital and Stanford Angels," Pixxel Chief Executive Officer Awais Ahmed said.
The seed round funding also saw participation of Ryan Johnson, former president of satellite imaging company Planet Labs.
"Johnson had founded Canadian earth imaging company Blackbridge which was acquired by Planet Labs. He will be joining our board now," Ahmed said.
Pixxel had earlier raised $7,00,000 (about Rs 5 crore) in pre-seed funding from Techstars and growX ventures and others in June 2019. Ahmed said the entire operations of the company, including manufacturing of satellites and their launch, should cost in the range of Rs 220 crore to Rs 375 crore.
The company will start monetising satellites from next year, he added.
Source: PTI
Maruti Suzuki Ties Up With IIM-B Startup Hub For Mobility Solutions
The country's largest carmaker Maruti Suzuki India Ltd. on Thursday said it has joined hands with the startup hub and incubation centre at the Indian Institute of Management Bangalore to spearhead innovations in the mobility space.
The partnership with Nadathur S Raghavan Centre for Entrepreneurial Learning at IIM-B would help to come up with innovations, which could be then applied in the mobility sector, the automaker said in a statement.
The tie-up will be include three months of pre-incubation and six months of incubation engagement, Maruti Suzuki said. "The mobility startup incubation program addresses the needs of early stage startups, which have potential of becoming large-scale businesses. This partnership with IIM-B will spearhead innovation in mobility space," the company’s Managing Director and Chief Financial Officer Kenichi Ayukawa said.
The partnership is aimed at nurturing next generation companies that will define future mobility solutions and can make a significant contribution to create jobs, he added. Under this program, early stage startups will get incubation support and a chance for potential partnership with the company to fast-track the growth of their venture.
Source: PTI