Noida-based WRS Info India Pvt. Ltd, which runs a marketplace for third-party retail loans called Deal4Loans, is looking for a big-ticket investment in its first institutional round of funding.
The fin-tech startup plans to raise at least $25 million in its first institutional round of funding. It is likely to finalise the deal within the next six months.
While the company is in no hurry to raise funds, it is looking to raise a big sum, Puru Vashishta, director, Deal4Loans told VCCircle.
“We have offers in the $25-60 million range from different investors, who have expressed interest in putting their money on us. It is just a question of finding the right fit.” said Vashishta. “We expect to make an announcement once it happens.”
He declined to name the investors that Deal4Loans is talking with for the investment.
Deal4Loans competes with financial products comparison sites such as BankBazaar, Apnapaisa.com and ScripBox. Last year, BankBazaar.com, run by Chennai-based A & A Dukaan Financial Services Pvt. Ltd, had raised Rs 375 crore ($59.1 million) in Series C funding from e-commerce giant Amazon and other investors. Again, Bangalore-based Scripbox.Com India Pvt. Ltd, which runs online fintech portal Scripbox, raised Rs 16 crore ($2.49 million) in its Series A round of funding from Accel Partners and a group of angel investors last year. In comparison, Deal4Loans is aiming for a much bigger ticket size for Series A funding round.
However, Vashishta says that as a six-year-old company with a relatively capital efficient business model, it does not require small ticket funding and is looking for a “much bigger figure, akin to a Series C or D round”.
Last month, Deal4Loans raised an undisclosed amount of funding from Ram Shriram, founding board member and one of the first investors in search engine giant Google, and WhatsApp’s global business head Neeraj Arora.
Vashishta, a former Wall Street hedge fund investor, was a participant in that round and subsequently joined the company as a director.
New product categories
Founded in 2009 by Durham University MBA alumnus Rishi Mehra, Deal4Loans offers comparison of retail loans across six different categories – home loan, personal loan, car loan, credit cards, loan against property and education loan. The platform currently has 50 lending partners (a mix of banks and non-banking financial companies) and 7 million registered customers.
The startup hopes to take the customer count to 10 million by the end of the current financial year, and 20 million within the next two years.
The company has recently launched small business loans as a product category, with ticket size of Rs 4-30 lakh. According to Vashishta, this sector has been the fastest growing category and the company expects it to account for 20% of its business by FY 2017.
Likewise, the fin-tech startup is also looking to launch mutual funds as a separate specialised product category within the next two quarters. While various mutual fund products will be compared on the platform,customers will also be given guidance and advice on the product best suited to the need of every individual.
“In light of the fillip received from SEBI (Securities and Exchange Board of India) to promote these products on online marketplaces such as ours, we want to elaborate our investment platform. The technology backbone is all set and ready for the launch of this new category,” said Vashishta.
The company is also exploring a revenue sharing model with its banking partners, on the basis of the asset book it builds for them. According to Vashishta, talks are currently going on in this regard.
Frugal burn rate, profitability
The company, which claims to have posted a profit every quarter since its inception, aims to facilitate disbursal of loans totalling $1 billion (Rs 6500 crore) by end of 2016-17, 17 and subsequently looking to facilitate disbursal of loans totalling Rs 10,000 crore per year from 2017-18. Deal4Loans has helped disburse Rs 10,000 crore worth of loans till date.
According to Vashishta, the frugal cash burn rate sustained by Deal4Loans is the hallmark of its business model.
“Our business model does not require too much capital,” he added.
According to data available from VCCEdge, the data research platform of VCCircle, Deal4Loans registered net sales of Rs 7.7 crore and a total income of Rs 7.9 crore for the financial year ending March 2015. The company registered gross profit of Rs 1.4 crore and net profit of Rs 78.5 lakh for the same time period.
“We make 0.5-1.25% commission on every home loan disbursal and 1.25-3% for every personal loan disbursal. In terms of disbursal value, 85% is home loan and 15% is personal loan,”said Vashishta. The average ticket size of a home loan is Rs 28 lakh and that of a personal loan is Rs 3 lakh.
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