To strengthen its focus on new technologies like data science and in anticipation of an uptick in loan disbursals ahead of the festival season, fintech start-up ZestMoney has raised $13.4 million in a follow-on Series A round of funding led by Xiaomi.

Apart from Xiaomi, existing investors such as Omidyar Capital, PayU and Ribbit Capital participated in the latest round. “With the upcoming festival season, we are expecting loan disbursals to pick up,” said Lizzie Chapman, co-founder, ZestMoney.

Technology aid

ZestMoney is banking on technology to target new customers and also gain insights into its loan book. ZestMoney is a consumer finance technology platform that enables online shoppers pay through EMIs without the need for a credit or debit card.

The start-up, which has three million registered users is trying to figure out ways in which collecting money can be automated and is even looking at targeted reminder messages to borrowers through Facebook or WhatsApp. Of the three million users, only a few lakhs have taken loans, with an interest rate of 0-1.5 per cent per month and default rates are 10 per cent, said Chapman.

Demand for online lending is on the rise, as India has only 10 million credit card users and traditional banks are wary of giving loans.

This has resulted in many fintech start-ups trying to fill that gap. For example, Indialends, a credit underwriting and analytics platform for unsecured consumer lending, recently raised $10 million in a Series B funding round, led by London-based ACP Partners with participation from investors like American Express Ventures, DSG Consumer Partners and AdvantEdge Partners along with the India-focused Chinese fund, Ganesh Ventures.

The company is planning to increase its user base by 20 per cent month on month and this, it believes, can be done by using Machine Learning and other forms of data analytics. Till date the company has raised $22 million in venture money and counts Amazon, Flipkart, Xiaomi, as some of its partners.

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