User-friendly Process & Agile Approach to Software Development Got This Startup its Pre-series A Fund
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Today, with the Indian financial domain having adapted technology-driven models to offer services online, ventures in the field are increasingly coming under the radar of venture capitalists and investors desirous of mentoring startups. Latest in the series is Bengaluru based peer-to-peer lending platform Finzy that has raised $1.3 million in a Pre-Series A round.
To decode fundraising strategies of Finzy, Entrepreneur India interacted with Amit More, the Founder and CEO at Finzy that was founded in 2016. Finzy’s USP includes its relatively simple and user-friendly process that allows borrowers to receive funds in less than 48 hours.
Aside borrowers, investors benefit from regular monthly returns at an average rate of 15.5 per cent, which is significantly higher than other asset classes. Finzy also facilitates loan documentation and allows investors to keep track of their investments via a detailed online dashboard.
Funding at Finzy
More states that after the initial seed fund round held in March 2017, the startup raised $1.3 million in its first pre-Series A during March 2018.
“We also plan to complete the second round of pre-Series A funding within next two months,” states More.
As far as wooing venture capitalists is concerned, More informs that Finzy’s investors were following developments at the startup ever since the time of inception. Finzy is only two-year old.
He states that the collective strength areas of Finzy’s in-house team coupled with the startup’s approach to business got the investors interested in pumping equity.
“The business progress we have achieved in the first 10 months after going live has strengthened their trust in us. In fact, we did not have to go out of our way to convince them about investing. It was more about timing and agreeing on the amount we were looking to raise”, adds More.
Analyzing Finzy’s models to getting funded
With respect to analyzing the sort of models that gets investors interested in pumping-in funds to significantly newer entrants in the financial lending vertical, More explains that it was the customer experience focus over which the business models were developed.
“We started with a Minimum Viable Product, to validate our business model. This helped us manage costs and timelines in early days. At that point, technology was an enabler to our business. However, as we look to scale we have brought in a lot of stability to our platform and we now have an in-house tech team with the goal to make technology drive our business,” says More.
Finzy looks confident of gaining consumers’ trust.
The company boasts of its agile approach to software development, wherein ideas are built, and validated with customers for evaluation and further enhancements, as its USP that has had investors interested.
Innovations in the Fintech sector – an entrepreneur’s perspective
More believes that the time is now ripe for innovation in the lending and investing segments.
“We will see a few B2C startups and a lot of B2B2C startups make significant progress and will attract interest of angels and VCs,” believes an optimistic More.
He counts banks, NBFCs, MFs, wealth managers collaborating with startups as a plus for his business.
“We foresee activity levels in fintech and especially the digital lending space definitely scaling new heights in the coming 24 to 36 months,” says More.
For the newbie technology-driven Fintech entrants (entrepreneurs)
For the new entrepreneurs aiming at offering value-driven services to demystify finance as a domain, and to raise quality funding from both angels as well as VCs, More’s suggestion is to build a commercially viable and solid business proposition, then focus on customer experience and efficient execution.
At this juncture, it is worth remembering that young entrepreneurs are often in a tearing hurry to scale. The tendency is to raise funds, burn the cash, raise funds again and burn the cash again.
More cautions that the above could turn into an unhealthy trend for both entrepreneurs as well as investors.
“This cycle continues till investors pull the plug. This is not a healthy trend and leads to frustrations with all stakeholders,” cautions More.
He also has a few pointers for newbie entrepreneurs in the sector:
Investors are not in a rush to exit within months of investing.
Always build a stretched but realistic business plan which can be achieved and keep your focus on the time it would take for cashflow breakeven.
Investors are anyways smart enough to make out what would work and what would not.
“Always be realistic about numbers and the opportunity. This always helps”, says More signing off.