PayU, the payments and fintech business of Prosus, and Alpha Wave Incubation (AWI) fund, which is backed by DisruptAD and managed by Falcon Edge Capital, have agreed to invest $12 million in indiagold, a gold-focused digital alternative credit platform.
The investment round will also see participations from early-stage investment firms Better Tomorrow Ventures, 3one4 Capital, Rainmatter Capital and existing investor Leo Capital, the company said in a statement.
The fresh capital will be used to expand its operations nationally and scale the business, it further said.
Currently, indiagold is operational across Delhi-NCR and Indore in India.
Founded in 2020 by Deepak Abbot and Nitin Misra, indiagold offers gold-backed loans, gold savings, and gold locker services.
The firm aims to target the gold financing business in India, which is primarily offline.
“India offers a large $650 billion addressable gold loan market which is highly fragmented and currently dominated by the informal segment.
Even the formal segment hasn’t adopted digital practices at scale. indiagold’s suite of financial products bridges this critical need gap by digitally transforming lending against gold…we are moving aggressively towards our larger vision of establishing gold holdings as an alternate credit score, and creating a gold back credit platform for lenders to provide instant credit against gold,” Misra and Abbot said.
The company also said that it has streamlined the process of signing up customers on indiagold as from now onwards the agents will arrive at the doorstep to inspect and weigh the gold.
The firm added that it can facilitate a line of credit to customers within 30 seconds.
Currently, the gold collateral loan business is dominated by unorganised players.
The organised gold-financing sector is dominated by a few publicly-listed players like Muthoot Finance, Manappuram Finance and Muthoot Fincorp.
Among digital startups, this week, Ruptok Fintech Pvt Ltd, a platform for gold loans, raised Rs 14 crore in debt funding from New Delhi-based NBFC Eclear Leasing & Finance.
Earlier this year, it had raised angel funding of Rs 10 crore ($1.4 million) from Canadian investment firm Wurk.
Last year in February, it had raised $60 million (about Rs 431 crore).
Earlier this week, gold loan-focussed non-banking financial company (NBFC) Indel Money, said it is planning to raise Rs 800-1,000 crore through a mix of debt and equity to fund business growth.
The company, incorporated in 1986 as Payal Holdings Pvt Ltd, said it is in talks with a number of private equity funds to divest up to a 15% stake.
In February, VCCircle had reported that Kerala-based Indel Money Pvt Ltd, a gold loan firm with presence in Kerala, Tamil Nadu and Karnataka, is planning a purchase of a peer for rolling into another south Indian state.