Digital lending fintech EarlySalary has raised $110 million (about Rs 878.8 crore) from investors co-led by private equity majors TPG’s Rise Fund and Norwest Venture Partners, the company said on Monday.
The Pune-based company said it plans to use the investment to accelerate its loan book, increase its presence to 150 cities, hire more for senior management functions, and grow the scope of its buy-now-pay-later (BNPL) business.
EarlySalary’s existing investor Piramal Capital & Housing Finance Ltd. also participated in the round. ET had reported on August 12 that EarlySalary was closing a $100-million fundraise from TPG and Norwest.
The round values EarlySalary at about $300 million, quoting people familiar with the deal’s details.
“The idea was to take the minimum threshold of investment in this round since we wanted dry powder to be available for the future,” Akshay Mehrotra, co-founder and chief executive of the company, told ET. “PEs understand the NBFC-led credit business better and we felt they were the right choice since they can drive efficiencies. We have continued to perform well in customer repeats, stickiness and customer exclusivity (loyalty). Piramal couldn’t invest in our previous round, so we opened this round to them.”
With the fund infusion, EarlySalary’s founders’ stake in the company will be 14%-15%.
The funding comes close on the heels of the Reserve Bank of India’s (RBI’s) new guidelines on digital lending, which put the focus back on regulated entities, giving fintechs with an active NBFC (non-banking financial company) licence an advantage. EarlySalary runs an NBFC through which it lends along with its other partners.
EarlySalary, founded in 2015 by Ashish Goyal and Mehrotra, provides instant loans to salaried individuals earning between Rs 1.5 lakh and Rs 10 lakh per annum.
The money is transferred directly to the borrower’s bank account.
The tenure of these loans on the platform ranges from three to 24 months, while the ticket size ranges between Rs 20,000 and Rs 50,000. However, the company is now experimenting with high-ticket value loans worth Rs 50,000 to Rs 80,000 through its BNPL category.
By acqui-hiring the health financing platform Healthfin in February this year, EarlySalary had entered the healthcare BNPL space, allowing consumers to convert their hospital bills into zero-cost equated monthly installments (EMIs) at the point of billing. It also provides BNPL loans for upskilling and is present as a checkout option on platforms of Indian edtech providers such as Jaro.
At present, 75% of loan disbursals on the EarlySalary platform continue to be cash, with the rest being
powered by its BNPL use cases. Now the company is looking to go deeper into these categories and provide loans for planned medical procedures, Mehrotra said.
At present, the company is disbursing close to Rs 350 crore in loans every month and wants to scale this to Rs 1000 crore in the next 12 months.
The company exited FY22 with an annual loan disbursal of more than Rs 1,000 crore and registered more than Rs 7 crore in profit at a group level. It had recorded Rs 200 crore in revenue, Mehrotra said. The company is now looking to grow these metrics 2.5-fold by the end of this fiscal.
Akshay Tanna, Partner at TPG said, “ EarlySalary delivers a critical financial service to the growing, yet underserved, middle-income segment in India. By providing modest, short-duration loans at competitive rates it is improving the financial health of its customer base and empowering them to finance things like upskilling courses, healthcare needs, personal emergencies, and short-term cash flow mismatches. The Rise Funds have invested in several financial technology companies that are building a more inclusive financial system around the world including Varo in the US, Duxiaoman in China, and Airtel Money in Africa.”
“Digital lending is emerging as one of the fastest growing fintech segments in India and we believe that EarlySalary is well positioned to serve the credit needs of millions of underserved but aspirational Indians,” said Niren Shah, managing director at Norwest Venture Partners.
Since its inception, EarlySalary has disbursed Rs 7,500 crore worth of loans through its own books and partners. It has provided 2.8 million loans across 800,000 active customers.
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