Digital lending startup ZestMoney on Wednesday said it has raised $50 million (Rs 368 crore) in its Series C round of funding from Australian buy-now-pay-later (BNPL) firm Zip Co Ltd.
The round will see participation from existing investors.
The investment marks Zip’s entry into the Indian market as the company will acquire a minority stake in ZestMoney and get a board seat.
ZestMoney said it will use the funding to expand the product suite, deepen the transaction network, strengthen its balance sheet and launch new business lines in insurance and savings.
Founded by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman in 2015, ZestMoney says its users can avail of EMIs to make purchases without having to use a credit card.
The company uses artificial intelligence and machine learning data models to approve new credit customers.
BNPL ticket sizes range from Rs 50 to Rs 5 lakh. The firm allows customers to transact at more than 10,000 online sites and 75,000 physical stores across the country.
“We believe India will leapfrog traditional products like credit cards, along with many other emerging markets, going straight to digital payment solutions. Over the last year we have seen applications for BNPL go up by 5x on our platform,” Chapman, CEO of ZestMoney, said in a statement.
The company will continue to strengthen partnerships with merchant networks and hire talent, Chapman added.
ZestMoney said 70% of their customers are in Tier II and III markets, and smartphones, large appliances, and fashion are the largest categories on the platform. It has partnered with 25 banks and NBFCs.
ZestMoney said it has 11 million registered users. Recently, it secured the corporate agent licence which will allow ZestMoney to offer insurance products on its platform.
In 2019, ZestMoney previously raised $20 million (around Rs 139.4 crore) in its Series B round led by venture capital firm Quona Capital.
The same year, the company raised funding from venture debt firm Alteria Capital as part of its extension of the stretched Series
A funding round of $13.4 million (Rs 93.6 crore) led by Chinese handset maker Xiaomi in August 2018.
Founded in Australia in 2013, Zip has a presence in 12 markets across five continents, serving more than 7.3 million customers and over 50,000 merchants.
Over the past year, the concept of BNPL has gathered significant traction, fuelled primarily by young people looking to avail short-term credit to buy lifestyle goods and services. BharatPe, which is soon going for an IPO, is entering the consumer segment with a BNPL product soon.
In March, KreditBee and Krazybee Services raised $70 million in funding just a month after a Series C round.