Following tremendous development in recent quarters, Capital Float, an Amazon-backed business that offers its buy now, pay later service on numerous well-known online platforms in India, including that of the e-commerce company, announced on Tuesday that it has secured $50 million in a fresh fundraising round.
The Bangalore-based startup’s Series D investment round was led by Lightrock India, bringing the seven-year-old company’s total funding to over $200 million (more than half of which is in debt). The fresh round of funding was also supported by previous investors Sequoia Capital India, Ribbit Capital, Creation Investments, as well as well-known businessmen David Vlez of Nubank, Kunal Shah of CRED, and Amrish Rau of Pine Labs.
Through collaborations with other businesses, Capital Float reaches its clients. It is a lending partner for a number of well-known online businesses, including Amazon India, Unacademy, Spicejet, Boat, a direct-to-consumer lifestyle and electronics brand, and MakeMyTrip, a travel booking company. According to Sashank Rishyasringa, co-founder of the firm, customers can use loans to pay for their products at the time of check out.
Additionally, the startup has agreements with Walnut to provide users with personal financing and Razorpay, a payments company, to serve small and medium-sized enterprises.
There are more than 2.5 million users of Capital Float. According to the business, these clients, who make more than 2 million purchases each month, use the service to finance more than $271 million annually. According to Rishyasringa, the online market has received the majority of entrepreneurs’ attention this year.
Our customer base has more than quadrupled in the past year, and even at this time when many other businesses saw a decline, our collection efficiency was still greater than 95%, he said.
In India, where only a small portion of the population has access to credit cards, the market for purchase now, pay later products is still in its infancy. However, a few businesses, such as Capital Float, ZestMoney, and LazyPay, are starting to gain traction in the industry.
Due to India’s low credit card adoption, very few citizens in the country have a standard credit score, which banks significantly rely on to determine a person’s credit worthiness prior to granting them a loan. Furthermore, banks are less motivated to make such checks because modest loans don’t yield significant returns for them.
According to Rishyasringa, 50 percent of Capital Float’s user base now lacks a credit card. Contrary to many other buy now, pay later services, Capital Float is a fully regulated organization. As a result, the business is required to inform the credit agencies about the transactions of its customers, assisting them in creating credit score profiles.
The business uses a variety of indications to underwrite each consumer. He said that the underwriting happens in just two clicks and five seconds.
The unique triad of customer experience, risk management, and merchant alliances that is at the core of enabling the BNPL opportunity in India has been resolved by Capital Float. Saleem Asaria, Partner at Lightrock India, stated in a statement that the model is very tempting because to its advanced underwriting and collections capability, robust technological platform, and ethical lending playbook.
Additionally, the team’s perseverance and execution-focused attitude throughout the entire credit cycle have constantly pleased us. We are eager to collaborate with the team to create a highly scalable, distinctive, and long-lasting company that will use digital credit and financial products to improve the lives of millions of clients in India.
Rishyasringa claimed that the additional funding will assist the startup in coping with the explosive expansion it has experienced lately. He said that the pandemic was mostly to blame for this increase, but he also pointed out that there have been some underlying, long-term changes in consumer behavior that have allowed the firm to make more significant advances.
According to him, the firm, which finances the loans through partnerships with banks like Kotak and YBL, intends to increase the number of its partners.
More critically, we see future opportunities for exponential growth. We think that our BNPL strategy can responsibly increase access to credit to over 100 million clients who are starting to trade online by providing solutions for both affordability and convenience in a fully-regulated manner. In a joint statement, Rishyasringa and Capital Floats co-founder Gaurav Hinduja said, “We are fortunate to have the backing of our investors in following this ambition and are delighted to work in cooperation to build out a world-class digital financial institution for India.”