The startup provides loans to college students for shopping on ecommerce platforms
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Bangalore-based student micro-lending startup, Buddy, has raised $500K from Blume Ventures, TracxnLabs and other angel investors in its Pre Series-A funding round.
Buddy provides short-term and long-term payment plans to college students enabling them to buy ecommerce products like mobile phones, laptops, cosmetics and footwear among others. The product price ranges from INR 1,000 to INR 90,000. The startup currently provides products in partnership with various ecommerce players including Flipkart, Amazon and Snapdeal.
The startup was founded in October 2015 by Rajan Bajaj and Deepak Malhotra. It officially started its operations in January 2016, and currently has presence in over 100 colleges across Bangalore. It also counts close to 5,000 active students on its platform.
Co-founder of Buddy Deepak Malhotra recalls and states that the idea originated during his college days at BITS when the students started getting a six month credit line on any purchase inside the campus. That witnessed a huge consumption spike across the campus. It finally materialised in the form of Buddy.
Buddy aims to capture a $750 Mn market demand through its services. The ecommerce market in India is expected to grow up to $100 Bn by 2020. Leveraging this market opportunity, Buddy will also partner with various online merchants and wallets to let the students use their services without making an instant payment and buy products on credit.
The newly raised funds will be used to expand on its credit risk & technology team to improve its infrastructure to support growth. The startup will concentrate on building a stronger presence in colleges through offline marketing channels.
Neha Singh of Tracxn said, “The opportunity in India is huge as students are increasingly involved in big ticket shopping. This is where Buddy is positioned to address the gap, created by the unavailability of credit card for college students.”
How It Works?
Students do not have options for taking micro-loans to purchase smartphones or laptops. Through Buddy, students have a hassle-free way of borrowing money and purchasing products through monthly installments.
Buddy provides an option to students to choose the length of the plan, that ranges from 3 months to 18 months, interest rates vary accordingly. The students just need to submit their ‘Student ID’, one of the classmates’ phone number and approval from parents to apply for the loan.
Students can choose a product from the partnered ecommerce portals and use the product URL to checkout from Buddy’s website or mobile app after entering the tenure of instalments & down payment amount.
Buddy has also employed over 100 part-time freelancers across Bangalore, most of which constitute student ambassadors, to take care of operations in colleges and check on fellow students for late repayments. Borrowers who miss deadlines receive messages from Buddy’s risk-management team as payment reminders.
The startup aims to become a leader in fin-tech innovation in India by leveraging the latest technology trends for e-verification, payments and fraud detection. Apart from their proprietary Data Science and Machine Learning algorithmic models, Buddy team is also working closely with NPCI for automated integration with new age payment technologies like NACH.
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