Mid-market private equity firm Xponentia Capital has led a ₹146 crore (nearly $18 million) funding round in fintech startup Zype, marking the maiden investment from its latest fund in a new-age fintech startup. The round also saw participation from Vivek Vig, a BFSI sector veteran. Vig has also mentored the startup.
Zype, which is in stealth mode, aims to improve access to credit for millennials and help them develop sustainable financial habits.
“We are in the process of building Zype, a customer-first platform where we intend to offer credit products and interactive money management tools,” said Yogi Sadana, founder and chief executive of Zype.
Zype, which is likely to be launched next year, is a credit-first financial well-being and lifestyle app.
Sadana claimed that the platform’s intuitive money management tools can help credit users manage their spending, receive bill reminders and make timely payments through the app.
The startup aims to use the funds to invest heavily in its technology stack, hire talent across multiple functions and for the go-to-market operations in the coming months.
“The future of fintech in India looks robust and with the Zype management team’s experience in technology, risk management, finance and payments, we are confident that Zype will play a key role in the fintech industry,” said P.R. Srinivasan, managing partner of Xponentia Capital.
Xponentia had in July this year marked the first close of its new vehicle and is likely to make the final close by December.
The firm is co-founded by PE veteran Ajay Relan who passed away last year. It had originally intended to raise ₹750 crore, almost double what it secured in its previous outing.
Xponentia returned more than 90% of the principal from the first fund thanks to a partial exit from Barbeque Nation and a full exit from its investment in Spoton Logistics.
Delhivery bought Spoton Logistics for about $235 million in 2021.
The debut fund had also struck investments in companies including Flight Simulation Technique Centre, Easy Home Finance, R4Rabbit, Medsource and Altigreen.
In the broader fintech space, several startups have managed to secure large ticket-sized cheques even though the overall startup ecosystem is facing a funding crunch along with a correction in valuations. However, some of these deals were dominated by follow-on funding from existing investors.
For instance, last week, KreditBee, announced that it has raised $80 million as part of its ongoing Series D round from existing investors Azim Premji’s Premji Invest, Motilal Oswal Alternates, TPG-backed NewQuest Capital Partners, and Mirae Asset Ventures.
In November, HDFC Bank-backed lending software provider Lentra raised $60 million in a Series B funding round, led by existing investors Bessemer Venture Partners (BVP) and Susquehanna International Group (SIG). In October, small and mid-size business-focused financing provider Progcap raised $50 million from existing backers including Google and Tiger Global.
According to a report by researchandmarkets.com, the global fintech market is expected to see annualized growth rate of 19.71% during 2021-2027. The report valued the market at $131.14 billion in 2021 and expects it to reach $385.93 billion by 2027.
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