One of America largest banks has just poured some money to help millions of Indians without a credit score secure loans and make purchases online for the first time in their lives.Bangalore-based ZestMoney announced today it has raised $15 million from Goldman Sachs and existinginvestors Naspers Fintech, Quona Capital, and Omidyar Network.
Lizzie Chapman, co-founder and chief executive of ZestMoney, told TechCrunch in an interview that the new investment is part of an extended Series B round, the first tranche of which it announced in April this year.The extended Series B round brings ZestMoney total raise to-date to $63 million, she said.The penetration of credit cards remains very low in India; roughly three in 100 people in the country have a credit card.
This has meant that very few people in the nation have a traditional credit score, which banks heavily rely on to establish one credit worthiness before issuing them a loan.Moreover, small loans don&t generate lucrative returns for banks, giving them less incentive to write such cheques.
In recent years, a growing number of Indian startups has stepped in to address this void.ZestMoney assesses other data points and uses AI to help these people build a profile and become credit-worthy.
The startup haspartnered with over 3,000 merchants (up from some 800 in late April), including Flipkart, Amazon, and Paytm, to offer financing options at point-of-sale.It has amassed more than 6 million users, who can access credit of $140 to $3,000.
To make the deal even better, many of these merchants offer interest-free option to customers, provided they could pay back in a specified amount of time.The startup, which has partnership with nearly every online payments processor including Razorpay, BillDesk, Cashfree, CCAvenue, and PayU,has also made a push in the brick and mortar market by inking deals with Chinese smartphone maker Xiaomi, and Pine Labs, which has over 300,000 point-of-sale machines across the country.ZestMoney has also raised an unspecified amount of debt, which it uses to finance credit to customers.
It recently entered ina strategic partnership with Credit Saison, a Japanese financial services company affiliated to Mizuho Financial Group, to deploy $100 million towards expanding digital lending in the country.Philip Aldis, a managing director at Goldman Sachs, said its investment in ZestMoney would enable more households in India to access credit.
&We look forward to leveraging our global experience and network for the continued growth of ZestMoney,& he said in a statement.Goldman Sachs has invested in a handful of startups in India, including logistics startupBlackBuck, home rental platform NextAway, news aggregator DailyHunt, and online furniture store PepperFry.The New York-headquartered firm, which is one of the world largest trading banks, has also invested in a number of financial startups including NuBank, a Brazilian startup that offers digital credit card to smartphone users.
It is also the banking partner for Apple Card.ZestMoney aims to disburse credit of worth $1 billion in 18 months and reach 300 million users one day.