Neobanking startup Yelo has raised an undisclosed amount in its first round of institutional funding from Matrix Partners India. Other investors in the round include Omidyar Network India, Flourish VC and Better Capital.
Operated by 0.5Bn FinHealth, Yelo (fashioned as येLo) offers services such as digital savings banking facility, remittance and micro-credit solutions to consumers with a monthly salary of less than INR 30K. Like many other neobanking solutions, Yelo is working to solve the financial inclusion problem by directly catering to the underserved market.
“The power of येLo lies in personalizing and curating relevant financial services offerings, that address people’s real needs and risks, in affordable packages priced under INR 50,” said Abhishek Challa, cofounder of 0.5Bn FinHealth, in a press release.
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The company is looking to expand to a team size of 100 this year and is looking to invest the funds for product development and sales. Yelo is targetting an addressable market of 8-10 Cr workers in startups, small corporate entities, food-delivery platforms, taxi services, among others, Nilesh Agarwal, cofounder and CEO told ET.
The startup has partnered with banks such as the Federal Bank and ICICI to offer its digital lending services through a smartphone-based application. As is typical in such partnerships, Yelo helps banks acquire customers that they would not ordinarily pursue due to the lack of creditworthiness or credit score. Yelo also offers a prepaid card, but to track all usage and cashflow through this card — presumably to build more products — it can only be used for digital transactions.
Neobanking startups are attracting the attention of big-name investors lately. Yelo is the third neobanking startup to raise funds in the last four months. In June, Open received $30 Mn funding in a financing round led by Tiger Global, whereas NiYo raised $35 Mn from Tencent Holdings and Horizons Venture in July.
One of the areas where Yelo could have an edge over these is its focus on language localisation. The company said that funds raised in this round will be used to build a local language-based experience to reach the so-called Next Half Billion (which also explains the name of the parent company). Its branding blends Hindi and English, which indicates a heavy bent towards the non-English speaking audience, which is increasingly growing thanks to new users coming online.