P2P lending platform Finzy closes pre-Series A round from HNIs

Peer-to-peer lending platform Finzy has closed its pre-Series A funding round at $2.3 million (Rs 16 crore at current exchange rates), which it raised from a group of high-net-worth individuals, a company statement said.

In March this year, the company had secured $1.3 million (Rs 8.4 crore then) as part of the first tranche of the pre-Series A round.

The investors in the round comprised about 12 senior professionals from the banking, financial services and insurance industry and entrepreneurs.

The startup will use the capital to expand its services in other geographies, develop technology and build stronger distribution networks, the statement added.

“Our seed investors also participated in this pre-Series A round at more than four times the valuation as compared to the seed round. This reflects our investor’s confidence in Finzy’s positioning, progress and potential,” chief executive officer Amit More said in the statement.

Run by Bridge Fintech Solutions Pvt. Ltd, Finzy connects verified borrowers looking for personal loans with investors using a proprietary credit assessment algorithm.

“We lend to prime customers, 80% of whom are salaried professionals. The in-house algorithm assesses close to 130 parameters including bank statements and demographic features like age, education, employer and other details. We end up rejecting 80% of the applicants, which is why we do not have any defaults since inception,” chief technology officer Abhinandan Sangam told TechCircle.

Currently, the platform is open to borrowers in eight cities while lenders can be location agnostic. The company has also added a new product, Reinvest Pro which allows lenders to reinvest various components of their returns on the platform.

The company claims that its monthly loan disbursements have grown more than two times in the last six months and is expected to grow by an additional three times by March 2019. It lends in the slab of Rs 50,000 to Rs 5 lakh with interest rates starting at 10.99% to 21.99%. Close to 98% of the lenders on Finzy are individuals as the platform does not want to be overly dependent on financial institutions, said Sangam.

The platform received a licence from the Reserve Bank of India for NBFC-P2P certification.

Incorporated in 2016, Finzy was established by More, Sangam, Vishwas Dixit (chief marketing officer) and Apoorv Gawde (chief information officer and product head). Prior to setting up Finzy, More was part of the credit solutions group at Edelweiss Financial Services; Sangam headed the travel and hospitality division at software firm ThoughtWorks; Dixit led the business consulting division for dealer profitability, finance and insurance at automaker Toyota Kirloskar Motor; and Gawde co-founded consulting firm ScaleFactor Consulting Labs and has also worked at ThoughtWorks.

Deals in the space

Last year, the RBI issued stringent guidelines for P2P lending startups that categorised them as NBFCs. Since then, a number of lending players have received a licence from the regulator, including Faircent, Peerlend.in, Cashkumar, PaisaDukan and RupeeCircle, to name a few.

In 2017, funding into India's fin-tech sector increased four times touching $1.84 billion from $447 million in 2016, data from VCCEdge, the research arm of News Corp VCCircle, showed.

The trend seems to be continuing in 2018 as well, as the segment has attracted considerable investor interest in the past few months.

The most recent deals in the space include US-based software firm Ebix, which in July acquired Pune-headquartered lending software firm Indus for $29 million (around Rs 200 crore).

Around the same time, lending startup RupeeCircle received Rs 4 crore (around $588,000) from NBFC Mahindra Finance.

In May, Cashkumar and PaisaDukan secured angel and seed investment, and in April, Rubique and Mintifi bagged venture funding.