Credy, Y Combinator-Backed Online Lending Platform, Secures $ 1.4 Million Funding

The online loan platform Credy, which facilitates low-cost online personal loans and tuition finance loans, has raised $ 1.4 million in seed funding from leading investors, including Y Combinator, Khosla Ventures, Vy Capital and a group of Silicon Valley-based angel investors.

The startup will use the proceeds to dramatically increase the loan portfolio, forge partnerships with institutional lenders, hire operations talent, and further develop technology to secure the client.

Founded in January 2017 by Pratish Gandhi, Abhash Anand and Harshit Vaishnav, ex-employees of Goldman Sachs, with over 15 years of experience in finance and technology, Credy was also part of Y Combinator bundle W’17 which included other Indian companies such as Playment, Bulk MRO, Servx, WiFi Dubba and Supr daily .

A quick overview of Credy

Credy is an online platform where you can apply for instant short term personal loans and tuition financing at reasonable rates. Interest rates vary from 10% to 12% per year. The average ticket size is $ 540 (INR 35,000) and the average repayment term is eight months. The digital engine facilitates instant online credit profiling through algorithms and credit bureau integration.

To qualify for a loan, a user must register and upload the required financial documents. Verification is done through the Aadhaar number thus eliminating the need for certified true copies and photographs and the loan agreement is digitally signed. It takes around 24 hours for approval and 48 hours to send the money to the bank. Credy charges a 2% processing fee to consumers.

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According to the startup’s claims, it has an eight-channel automated repayment management tool for disbursed loans, an in-house customizable Loan Management System (LMS), and solid management experience. risks. The startup has invested heavily in fraud prevention, primarily focused on eliminating frauds such as submitting forged documents. It also recently launched its mobile borrower app after several months of beta testing.

Credy charges criminal interest on the amount due, in the event of non-payment by the due date.

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The Bengaluru-based loan startup with over 19 people on the team also recently entered into a loan partnership with Fullerton India. In addition, he has also applied for his own NBFC license and is awaiting approval from RBI, Pratish said.

Ajay Pareek, Executive Vice President and Head – Urban Affairs, Fullerton India Credit Company Ltd. said, “Our association with Credy opens a new path for us to reach the next generation of Millennials. At Fullerton India, we understand that in today’s fast-paced world, clients are looking for convenient, cost-free loan options. paper and we would like to be available at these points of contact when these customers are looking for easy and quick credit options.

Speaking to Inc42, Pratish did not disclose the total amount of loans disbursed, but did claim that the backlog has increased by 35% to 40% month after month. With Fullerton as his partner, Credy expects him to continue to grow at the same rate.

Meanwhile, when it comes to defaults, the startup’s 90-day NPA is currently around 2%. To check the default values, Credy actively tracks the 15, 30, 45, 60, 75 day NPA rate as well as the performance of vintage loans. Shedding light on the vintage’s performance, Pratish reveals that around 60% to 65% of loans have been fully repaid or have gone through more than 50% of the loan life cycle.

Asked how Credy differentiates itself from other online lending startups, he mentions that one way he does it by the way he has structured the products. Through the Tuition Funding Product, Credy taps into the market of parents looking to fund their child’s education. Since most parents don’t want to compromise, chances are they won’t default on loans. Therefore, one arm of the startup is only looking at tuition finance loans, where Credy makes payments to the school on behalf of parents and collects down payments from parents.

Thus, thanks to this path, the startup supported by Y Combinator takes a unique path to acquire customers who do not necessarily have a credit footprint and help them establish lines of credit. Most fintech companies tend to ignore customers with no credit history and focus on employees. Credy aims to differentiate itself by tapping into this white space.

India’s online loan market: a growing space

Small businesses in emerging markets, like India, are facing challenges, according to a report released by the International Finance Corporation (IFC) a funding gap of $ 2 billion. Moreover, in his report Credit Suisse reported that the global consumer and SME loan market is expected to reach $ 3 billion over the next decade, through government initiatives to provide hassle-free and cashless financial transactions.

A NASSCOM report previously predicted that India’s fintech software market will hit $ 2.4 billion by 2020, from the current $ 1.2 billion. In this competitive space, Credy competes with many other players in the lending space such as Cash Suvidha, Aye Finance, NeoGrowth Credit, OptaCredit, etc. many of which have already caught the attention of investors.

Vinod Khosla, who invested in Credy, said: “Digital lending is the only way to lend to a larger segment of society fairly, at low cost and impartially. It is essential to strengthen financial inclusion.

This month, Delhi-based online lending platform Cash Suvidha raised $ 2.5 million in debt financing through financial institutions and private placement. Last month, Gurugram-based online lending startup Aye Finance raised $ 6.28 million (INR 40 Cr) as a term loan from Northern Arc Capital Limited (formerly IFMR Capital Limited).

By opening up online lending to a wider group of borrowers and lenders, Credy hopes to capitalize on the current wave of paperless and hassle-free financing and digitization in India. With this recent funding, the Y-backed online lending startup Combinator hopes to make a dent in India’s burgeoning consumer loan market.


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David A. Albanese