Capital Float is an Amazon-backed startup which offers a buy now, pay later service through many of India's most popular online platforms. It announced Tuesday that it had raised $50 million to fund a new investment after experiencing strong growth in the last quarter.
Lightrock India led the new venture in Bangalore-based startup. This brings the firm's total raise to more than $600 million, nearly half of which is in loans. The new round also included existing investors Sequoia Capital India and Ribbit Capital as well as prominent entrepreneurs Amrish Rau (Pine Labs), Kunal Shah (CRED), and David Vlez (Nubank).
Capital Float partners with other companies to reach customers. It is a partner in lending for many online platforms, including Amazon India, Unacademy online learning service, Spicejet airline, direct-to consumers lifestyle brand, and MakeMyTrip travel booking company. In an interview with TechCrunch, Sashank Rishyasringa explained that customers can use a loan to make their purchases at check-out.
Razorpay, a payments company, has also partnered with the startup to reach small- and medium-sized companies. Walnut will offer personal financing to customers.
Capital Float boasts over 2.5 million customers. The startup stated that these customers make more than 2 million purchases per month and use the service to finance $271 million annually. Rishyasringa said that most startups have been focusing on the internet over the past year.
He said that our customer base has quadrupled over the past 12 months and that our collection efficiency was still higher than 95% during a period when other companies were experiencing a decline.
India's buy now, pay later (B2P) market is still in its infancy. Only a small percentage of Indians have a credit card. However, a few startups such as Capital Float and ZestMoney are starting to gain traction in this market.
India's low credit penetration has meant that there are very few Indians with a credit score that banks can rely on to determine creditworthiness before they issue them loans. Banks are less inclined to write small loans because they don't generate high returns on their investments.
Rishyasringa said that half of Capital Floats users today don't have a creditcard. Capital Float is fully regulated, which is a departure from other buy-now, pay-late services. The firm must report to credit bureaus all transactions of users, which helps them build their credit scores.
Each customer is underwritten by the startup using a variety of signals. He said that underwriting is done in just two clicks and five second.
Capital Float has successfully solved the unique triumvirate that includes customer experience, risk management and merchant partnerships. This is what lies at the core of India's BNPL potential. It has a strong technology platform and a sophisticated underwriting, collections, and ethical lending playbook that make the model compelling, Saleem Asaria (Partner at Lightrock India) said in a statement.
The team's tenacity, focus and perseverance throughout a full credit cycle has been a constant inspiration. We are eager to collaborate with the team in building a high-scalable, differentiated and sustainable business that will positively affect the lives of millions Indian customers through digital credit and other financial products.
Rishyasringa stated that the new capital will allow the startup to continue its rapid growth. While he attributed much of the growth to the pandemics, he also pointed out that there have been long-term changes that have helped the startup gain more ground.
He said that the startup, which finances loans through partnerships with banks like YBL and Kotak, is looking to expand its partner.
We see an enormous growth opportunity from now on. We believe our BNPL approach to credit can be responsible for expanding access to credit to more than 100 million people who have started to transact online. It addresses affordability and convenience. In a joint statement, Gaurav Hinduja, Capital Floats co-founder, stated that it was a privilege to have the support and enthusiasm of our investors to pursue this vision.
