Embedded Finance Startup Niro Bags $11 Mn To Help B2C Startups Bulid Loan Products

Embedded finance startup Niro has raised $11 Mn (INR 90 Cr), in a mix of equity and debt, as part of its Series A funding round. While the startup raised $8.5 Mn via equity funding, the remaining $2.5 Mn was secured through venture debt from Innoven Capital.

The equity fundraise saw participation from a consortium of institutional investors such as Elevar Equity, GMO Venture Partners, Rebright Partners, and Mitsui Sumitomo Insurance VC, among others. 

Speaking to Inc42, Niro’s CEO and cofounder Aditya Kumar said that the startup will use the funding to support growth initiatives and enhance and expand its product offerings. 

The startup also plans to deploy the capital to shore up its tech vertical and make strategic investments to ramp up its risk and analytics capabilities. 

The fintech startup also plans to hire more employees for its sales and operations verticals and is also looking to onboard a senior executive for the data and analytics segment. 

“I feel ecstatic and it feels great. The new round comes a little over 18 months after our previous fundraiser, especially in this environment where funding is reasonably scarce. I think it’s a validation and a testament to the work that we have done in the past,” Kumar said. 

Founded in 2021 by Aditya Kumar and Sankalp Mathur, Niro offers embedded lending solutions for users of consumer internet platforms. The startup allows consumer businesses to embed customised credit offerings to drive revenue growth. 

This is Kumar’s second stint as an entrepreneur. Earlier, he founded a lending platform, Qbera. After his startup was acquired by InCred in 2020, Kumar worked at the latter and realised that there was a growing interest from consumer-facing businesses to monetise their user base. 

“…What I realised was that, at the end of the day, no one product would be able to service the needs of a large consumer internet platform, which has a heterogeneous customer base. That was the inspiration to move out in March of 2021, and, subsequently, we spent six months building a team and raising capital,” the Niro CEO added. 

This comes nearly 1.5 years after the startup raised $3.5 Mn in a seed funding round led by Elevar Equity in 2021. 

Since then, the startup has scaled its operations to disburse more than INR 300 Cr of loans across 200+ cities in the country. It has a monthly origination run rate of over 60 Cr and an annualised run rate (ARR) of $4 Mn. 

It partners with NBFCs such as L&T Finance and Muthoot Finance to offer loans to its customers. It also claims to have onboarded a slew of consumer businesses such as Snapdeal, Quikr, Housing.com, and others. 

The growth has led to Niro scaling up its headcount, which has grown from 15 to 30 in the last two quarters. 

Kumar also told Inc42 that the company is eyeing a 3X growth on all metrics over the course of 12 months. Besides, the company is also targeting a $1 Bn balance sheet (in terms of the portfolio that Niro manages) in the next three years. 

From six platform partners currently, the fintech player wants to scale the number to 15-20 large consumer-facing internet platforms by 2026. 

On what gave the startup the edge over its competitors, Kumar said that Niro is solving all major pain points of the embedding finance ecosystem such as building the technology from scratch, managing the underwriting process, customer identification, product design, marketing, and delivery.

“To build a scalable lending business, you need all these pieces to synergise to be able to monetise and scale. But, our competitors are solving for individual parts and we are building the entire ecosystem which gives us an edge over other players,” said Kumar. 

The fundraising comes at a time when the overarching fintech ecosystem is also witnessing the funding winter chill on account of global macroeconomic headwinds, wary investors and concerns over profitability. In the first quarter (Q1) of 2023, Indian fintech startups bagged $1.28 Bn in funding, down nearly 3% from $1.77 Bn in Q1 2022.

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