KreditBee raises $80 million in Series D round amidst funding crunch
KreditBee, a digital lending platform, on Friday secured $80 million as a part of its ongoing Series D investment round. The current investment saw participation from existing investors Azim Premji’s Premji Invest, Motilal Oswal Alternates, TPG-backed NewQuest Capital Partners, and Mirae Asset Ventures.
Japanese-based MUFG Bank, a financial institution firm also joined as a new investor in the current round. A spokeswoman for the startup declined to share details of the valuation of the firm but added the lending startup’s Series D round is yet to close.
The funds will be used to diversify KreditBee’s product portfolio and strengthen its tech stack to serve the 400 million middle India population on its platform. The company offers credit and other personal finance requirements through its in-house RBI-registered NBFC–Krazybee Services Private Limited along with partnerships with more than 10 renowned financial institutions. The platform claimed that it is targeting to cross an AUM of $1 billion over the next 6 to 9 months.
“The investment adds more weight to its vision of encouraging financial independence through a smart digital experience, which is what India stands for today. With the current round, we look forward to expand our set of solutions to serve our growing consumer base,” said Madhusudan E, co-founder & CEO, KreditBee in a statement.
KreditBee currently offers multiple types of personal loans, online and offline checkout finance, and digital gold. The company further plans to diversify its product offering by venturing into digitally-enabled secured loans, home loans, and credit lines. This involves expanding its lending portfolio by introducing financial services like insurance, credit score report, and merchant-side offers, among others.
To date, the startup has raised around $280 million including a $75 million Series C round in 2021. Kreditbee’s $80 million funding round is noteworthy given the current economic condition and an acute funding crunch, especially across late stages globally. According to PwC’s Startup Deals Tracker report, growth and late-stage deals volumes declined by a record 75% and 72%, respectively, in Q3CY22 compared to the first quarter of the calendar year (Q1CY22).
In Q3CY22, there was only $2.13 billion worth of growth and late deals reported, compared to a high of $10.33 billion worth of deals in Q1CY22. The number of (growth & late stage) were also down to just around 62 in Q3CY22 compared to around 150 deals reported in Q1CY22.
Apart from this, the online lending sector has come under the RBI scanner, especially after complaints from customers and public scrutiny over high-interest rates, hidden charges, and aggressive loan recovery. Apart from this, many unregulated lending apps on online app stores were found to be flouting accepted lending norms which prompted action from various law enforcement agencies in the recent past.
The Reserve Bank of India’s (RBI) latest guidelines for regulating digital lending platforms prescribe a more cautious regime for players. Under the new guidelines which came into effect on Dec 1, digital lending apps operating without either a banking or an NBFC license will be either forced to shut shop or suspend operations indefinitely until they are compliant with the new regulations.
The personal loan market is expected to reach a size of $1 Tn by 2025. Within the personal loan segment in India, KreditBee competes with the likes of Navi, LoanTap, Capital Float, ZestMoney, IndiaLends, Paisabazaar and many more.
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