Amid persistent funding difficulties startups face, Dvara Holdings, a company with a diverse portfolio of eight businesses ranging from non-bank financial companies (NBFCs) to startups, aims to achieve cash breakeven for five of its startups within the next 12 to 18 months. This move is aimed at coping with the challenging funding scenario, where investors are no longer enthusiastic about solely growth-oriented startups that incur losses, Samir Shah, Vice Chair and Co-Founder of Dvara Holdings, told businessline.
Indian start-ups raised $2.8 billion in funding in the first quarter of 2023, a 75 per cent drop, compared to the same period in the previous year’s $11.9 billion, according to a report by Tracxn.
“It is crucial to generate profits to ensure the company’s sustainability and growth in the market—to ensure that in the future, when we raise money from investors, it will be for growth rather than for funding burn,” explained Shah.
As part of the Dvara Venture Studio, it has incubated five startups: Dvara E-Dairy, Dvara Health Finance (DHF), Dvara E-Registry, Dvara SmartGold, and Dvara Money. “We have invested about Rs. 100 crore in building these five startups. In addition to our own capital, we also have a strategy of partnering with Venture Capital investors in our startups.”
It also operates two NBFCs: Dvara Kshetriya Gramin Financial Services (KGFS), a rural retail NBFC focused on providing financial products to remote rural households, and a commercial-side NBFC focused on building commercially sustainable social enterprises called Northern Arc Capital.
Northern Arc Capital has around ₹9,000 crore in assets under management (AUMs)—the company started off as a wholesale NBFC—has scaled quite well and is profitable, said Shah. In fact, in the last 3–4 years, it has added direct retail business segments to the company, making it a diversified digital NBFC.
Northern Arc’s long-term plan is to rapidly grow its retail book while maintaining its wholesale operations. “We anticipate filing for an initial public offering (IPO) in the next two to three years,” he added.
Through its rural retail NBFC, the company aims to offer banking and financial services at the doorstep of every village. The company wants to deploy one agent for each village.
Currently, it has 8,000 agents for 8,000 villages. “By the end of this financial year, i.e., 2023–24, we want to have 20,000 agents, basically one agent for all the 20,000 villages that we serve.”
He explained how the agent would operate, “All the agents will have an app from KGFS to start giving out financial services to rural customers, and we will expand our offering with the launch of digital loans and digital insurance products on that app. The aim is to bring agent banking to rural India.”
It has around 600,000 customers across the ten states it serves, which includes Bihar, Chhattisgarh, Haryana, Jharkhand, Karnataka, Odisha, Punjab, Tamil Nadu, Uttar Pradesh, Uttarakhand and maybe expand to Andhra Pradesh and Telangana in the future.