Bengaluru-based digital banking startup NiYO Solutions has raised $35 million (Rs 240.2 crore at current exchange rates) in a Series B funding round from investors including Chinese conglomerate Tencent.
Existing investors Horizons Ventures and JS Capital also took part in the round, NiYO said in a statement.
NiYO, operated by Finnew Solutions Pvt. Ltd, said it will use the funding to offer digital banking solutions to its retail and small- and medium-enterprise customer base.
The company, which claims to serve to one million people, aims to cater to five million customers over the next three years.
The fresh capital takes the total amount of money the startup has raised to around $49 million. In January last year, the startup had raised $13.2 million in a Series A round from US-based venture capital firms Social Capital, JS Capital and Horizons Ventures. Existing investor Prime Venture Partners had also participated in that round. Prime Venture had invested $1 million in the company in 2016.
NiYO says its aim is to use its financial technology and services to offer comprehensive digital banking solutions to its retail and small- and medium-enterprise customer base.
Founders Vinay Bagri and Virender Bisht told VCCircle in a telephonic interview that the company plans to use the capital mainly for product expansion and marketing as well as exploring international markets. NiYO also aims to break even operationally within a few months, they said.
The founders said that the startup is processing around Rs 300 crore in salaries every month. While NiYO is focussing on the liabilities banking vertical, it is also exploring other verticals and has piloted a wealth management programme.
The founders also said the neo-bank was not looking to float a non-banking financial company this year. However, they added that the company was exploring acquisition opportunities, particular in the human resources-management segment to augment its salary distribution and payroll services.
The company, through NiYO Bharat Payroll Solution, provides savings, payments, investments and insurance services in the blue-collar salaried segment. It promotes financial inclusion by providing services to unorganised and semi-organised labour-intensive sectors. It also plans to issue a travel card called NiYO Global Card.
Bagri and Bisht cited small banks catering to unorganised labour and large banks with foreign exchange operations as the company’s primary competitors.
The company has offices in Bengaluru, Delhi and Mumbai with a sales presence in over 20 states and union territories. It employs around 800 people.
Tencent Holdings Ltd has stepped up its India presence by betting on its biggest revenue generator: gaming. In September last year, the conglomerate led a large investment round in Mumbai-based Dream11 Fantasy Pvt. Ltd, which operates an eponymous fantasy sport website.
JS Capital is the family office of Jonathan Soros, son of George Soros who ran the storied US investment firm Soros Fund Management. In August 2017, JS Capital had invested along with Social Capital and other investors in Prime Venture’s portfolio company Ezetap.
Horizons Ventures is a Hong Kong-based VC firm. Apart from NiYO and Ezetap, its portfolio includes the United States-based video communications platform Zoom, Australian fintech Airwallex and Teraki, an artificial intelligence-based automotive insurance startup in Germany.
The fintech segment has seen a lot of activity over the past many months, with companies seeking to provide customers with new-age products as well as address gaps in the financial services sector.
Last month, Tiger Global led a Rs 210 crore Series B funding round in Bengaluru-based neo-bank Open, which provides collection and payout automation services for small businesses. The New York-based firm also led a $15.5 million (around Rs 107.73 crore) Series A round in OkCredit, which helps merchants keep track of payments and credit records via a mobile application.
Also in June, online payment gateway startup Razorpay Software Pvt. Ltd raised $75 million (around Rs 524 crore) in a Series C funding round. US-based Ribbit Capital and Sequoia Capital India led the investment. Existing investors Tiger Global and Y Combinator also participated.