The Funding Will Be Used To Build A Robust Risk Model And Algorithm For Credit Assessment
Bengaluru-based micro lending platform KrazyBee has raised $8 Mn Series A equity and debt financing led by Xiaomi Technologies and Shunwei Capital. The round also saw participation from E-city Ventures and RK Group.
The newly-raised capital will be used for strengthening the company’s risk model and core algorithm, geared towards catering to new market segments and focusing on product diversification. A portion of the funding will also be spent on geographical expansion in existing segments.
Commenting on the Series A round, Xiaomi Technologies Investment Director Shirley Mao said, “The Indian demography has a large population of urban young adults that spend a lot online & offline. For such an enormous ecosystem, the need for urgent personal finance for purchase requirements is highly underserved. An appropriate focus towards tech-based credit evaluation and compliant sourcing of funds can help capture and penetrate this market big time.”
As stated by KrazyBee founder and CEO Madhusudan E., the funding from Xiaomi Technologies and Shunwei Capital will enable the company to develop a robust risk algorithm that would, in turn, assist the platform in making system-generated decision on every profile. With the investment, the micro lending startup also looks to enhance the efficiency and accuracy of the platform, when it comes to credit assessment.
Madhusudhan added, “KrazyBee’s mission is to make credit for young professionals and college students in India accessible and affordable. Financial independence among young adults is the need of the hour. A solution which helps them avail personal finance at maximum ease and minimum time is going to win the game in this market.”
Recently in the month of June, the micro lending platform received a non-banking financial corporation (NBFC) license from the RBI. At present, there are six other NBFCs that are lending via the KrazyBee platform. The newly-acquired license, KrazyBee founder and CEO Madhusudan E. believes, will help enhance the flexibility and ease of managing funds.
Madhusudan stated, “We realized very early that to grow and sustain in this industry, having a steady source and lower cost of funds is quintessential, and this had been our focus right from the very beginning.”
KrazyBee: Bringing Students Under The Scope Of Micro Lending
Founded in 2015 by Madhusudan E and Wan Hong, KrazyBee is a micro lending platform that provides purchase finance online via a flexible monthly payment plan. The startup began by focussing on the student segment and is building a merit-based credit score system.
It currently operates across Bengaluru, Hyderabad, Pune, Mysore and Vellore, and has recently expanded to Mumbai, Chennai, Coimbatore, Nagpur, Nashik and Manipal. As claimed by Madhusudhan, KrazyBee processes nearly 1,700 loan applications every day and boasts a non-performing asset (NPA) score of less than 1%. In the last 18 months, the startup has disbursed a credit line worth more than $23.1 Mn (150 Cr). The average ticket size of loans on the platform is around $185.4 (INR 12,000).
KrazyBee currently has more than 300K registered users, with more than 50,000 of them being active confirmed users. At present, KrazyBee’s product portfolio includes ecommerce purchase, cash credit, two-wheeler credit, college semester/tuition fees credit among others. The current customer base comprises largely of young professionals and UG/PG students under the age of 30.
The company claims to have tie-ups with nearly 800 colleges in India. In each of these colleges, they have one or more student campus managers. Currently, there are nearly 1000 Campus Managers across all the cities, who use the KrazyBee app to perform customer KYC. KrazyBee has also reportedly come up with an option for the customers to e-verify themselves after completing their profile.
Most products purchased via KrazyBee are electronics items such as smartphones, cameras and mobile accessories, along with apparel such as branded clothes, shoes and watches. A nominal interest is charged per transaction. It has tied up with major ecommerce players such as Flipkart, Paytm, Amazon and Snapdeal, among others.
Total funding raised by KrazyBee till date is around $13 Mn, including the latest round from Shunwei Capital and Xiaomi Technologies. In June 2016, the micro lending platform raised $2 Mn in Seed funding from Chinese micro-loan/ecommerce player Fenqile (a micro-loan site) and Chinese mobile ad network YeahMobi. Later in December last year, the startup secured another $3 Mn Pre-Series A financing from Plum Ventures and existing investors.
A Rising Class Of Startups Are Offering Consumer Credit Today
In the micro lending segment, KrazyBee competes against Buddy, Onemi, Finomena and Quicklo. In July 2017, Reliance Capital made an investment of $1 Mn (INR 7 Cr) in Bengaluru-based alternative digital lending startup Billionloans. The seed funding round was routed through its wholly-owned subsidiary Reliance Corporate Advisory Services Limited.
Prior to that, in April, Mumbai-based Unicorn India Ventures, a SEBI registered AIF-I VC fund invested an undisclosed amount in data-driven micro lending platform SmartCoin. A month before that, in March, Delhi-based RedCarpet, a student microlending startup raised $2.5 Mn funding in a round led by Lightspeed Venture Partners.
The fintech sector in India is growing at an accelerated pace and is forecasted to reach $2.4 Bn by 2020, as per a report by KPMG. With the latest Series A funding from Xiaomi Technologies and Shunwei Capital, micro lending platform KrazyBee is working to ensure easy availability of consumer credit in the country.
