EarlySalary, a start-up in digital financing, raises $110 million at a $300 million value

The Pune-based company stated that it intended to utilize the investment to expand the breadth of its buy-now-pay-later (BNPL) business, expand its footprint to 150 locations, and accelerate the growth of its loan book.

EarlySalary, a digital lending fintech, announced on Monday that it has secured $110 million (about Rs 878.8 crore) from investors co-led by TPG’s Rise Fund and Norwest Venture Partners, two of the largest names in private equity.

The Pune-based company stated that it intended to utilize the investment to expand the breadth of its buy-now-pay-later (BNPL) business, expand its footprint to 150 locations, and accelerate the growth of its loan book.

Piramal Capital & Housing Finance Ltd NSE 1.49%, an existing investor in EarlySalary, also took part in the round. EarlySalary had closed a $100 million fundraise from TPG and Norwest, according to an ET story from August 12.

According to ET’s earlier story, which was based on persons familiar with the terms of the sale, the round gives EarlySalary a $300 million valuation.

According to Akshay Mehrotra, cofounder, and firm CEO, “the aim was to take the least threshold of investment in this round since we wanted dry powder to be accessible for the future.” “PEs have a better understanding of the NBFC-led loan sector, and we thought they were the best option because they can promote efficiency. In terms of customer loyalty, stickiness, and customer exclusivity, we have maintained our strong performance (loyalty). Due to Piramal’s inability to participate in our last round, we made this round available to them.

The new investment will increase the EarlySalary founders’ ownership interest from 14% to 15%.

Fintechs with an active NBFC (non-banking financial company) license has an edge because the funding comes shortly after the Reserve Bank of India (RBI) released new guidelines on digital lending that refocus attention on regulated businesses. Together with its other partners, EarlySalary manages an NBFC through which it makes loans.

Ashish Goyal and Mehrotra created EarlySalary in 2015 to offer immediate loans to salaried people making between Rs 1.5 lakh and Rs 10 lakh annually. The borrower’s bank account receives the funds directly.

The average ticket size for these loans on the platform is between Rs 20,000 and Rs 50,000. The term of these loans ranges from three to 24 months. Additionally, according to EarlySalary, loans on the platform can be up to Rs 5 lakh. Through the BNPL category, the corporation is currently experimenting with high-ticket loans from Rs 50,000 to Rs 80,000.

EarlySalary entered the healthcare BNPL arena in February of this year by acquiring the health financing platform Healthfin, enabling patients to convert their hospital bills into zero-cost equated monthly installments (EMIs) at the moment of billing. Additionally, it offers BNPL loans for upskilling and is a checkout option on the websites of Indian edtech companies like Jaro.

Currently, cash still accounts for 75% of loan disbursals on the EarlySalary platform, with its BNPL use cases handling the other 25%. According to Mehrotra, the business is currently looking to delve further into these categories and offer loans for anticipated medical treatments.

The corporation plans to increase its monthly loan disbursements from about Rs 350 crore to Rs 1 billion in the upcoming 12 months.

With an annual loan disbursal of more than Rs 1,000 crore and a group-level profit of more than Rs 7, crore, the company ended FY22 in a profitable position. According to Mehrotra, it brought in 200 crore rupees in revenue. By the conclusion of this fiscal year, the corporation wants to increase these measures by a factor of 2.5.

“EarlySalary supplies a key financial service to the expanding yet underserved middle-income market in India,” said Akshay Tanna, Partner at TPG. By offering small, brief loans at affordable rates, it is enhancing the financial well-being of its clientele and giving them the ability to pay for things like training programs, medical expenses, unforeseen personal expenses, and short-term cash flow imbalances. The Rise Funds have invested in a number of companies that provide financial technologies are building a more inclusive financial system around the world including Varo in the US, Duxiaoman in China, and Airtel Money in Africa.”

Niren Shah, managing director at Norwest Venture Partners, stated that “digital lending is developing as one of the fastest growing fintech categories in India and we feel that EarlySalary is ideally positioned to fulfill the credit needs of millions of underserved but aspirational Indians.”

Through its own books and partners, EarlySalary has disbursed loans of Rs 7,500 crore since its founding. It has given 2.8 million loans to 800,000 consumers who are still active.