Capital Float Raises $50 Million - Amazon Backed BNPL
Capital Float Secures $50 Million in New Funding
Capital Float, a buy now, pay later (BNPL) service provider backed by Amazon, announced on Tuesday a successful fundraising round of $50 million. This investment follows substantial growth experienced by the company in recent quarters.
Investment Details and Participants
Lightrock India spearheaded the latest investment in the Bangalore-based startup. This brings the total funding raised by the seven-year-old firm to over $600 million, with more than half originating from debt financing.
Existing investors, including Sequoia Capital India, Ribbit Capital, and Creation Investments, also contributed to this round. Notable entrepreneurs such as David Vélez of Nubank, Kunal Shah of CRED, and Amrish Rau of Pine Labs participated as well.
Strategic Partnerships Drive Customer Reach
Capital Float expands its reach through strategic alliances with various companies. It functions as a lending partner for prominent online platforms like Amazon India, Unacademy, Spicejet, Boat, and MakeMyTrip.
Customers can utilize loan options during checkout on these platforms, as explained by Sashank Rishyasringa, the startup’s co-founder, in a recent TechCrunch interview.
Furthermore, Capital Float collaborates with Razorpay to serve small and medium-sized businesses and with Walnut to offer personal finance solutions.
Growth and Usage Statistics
The company has acquired a customer base exceeding 2.5 million individuals. These customers complete over 2 million transactions monthly, financing more than $271 million annually.
Rishyasringa indicated that the startup’s primary focus throughout the year has been within the online marketplace.
“Over the past 12 months, our customer base has grown more than fourfold, and our collection rate remained above 95% despite challenges faced by other companies,” he stated.
The Nascent BNPL Market in India
The buy now, pay later sector in India is still developing, with a relatively small percentage of the population possessing credit cards.
However, companies like Capital Float, ZestMoney, and LazyPay are demonstrating increasing traction within this market.
Addressing Credit Access Challenges
The limited availability of credit cards in India results in a significant portion of the population lacking a traditional credit history, which banks typically rely on for loan approvals.
Additionally, the smaller size of these loans often yields lower returns for banks, reducing their incentive to provide financing.
Rishyasringa noted that half of Capital Float’s current users do not hold a credit card. Importantly, Capital Float operates as a fully regulated entity, reporting user transaction data to credit bureaus to aid in credit score development.
Underwriting and Risk Management
The startup employs a comprehensive underwriting process, utilizing various data points. This evaluation is completed “within two clicks and five seconds,” according to Rishyasringa.
Industry Expert Commentary
Saleem Asaria, partner at Lightrock India, commented, “Capital Float has effectively addressed the critical elements of customer experience, risk management, and merchant partnerships essential for unlocking the BNPL opportunity in India.”
He further added, “Their strong technology platform, sophisticated underwriting capabilities, and ethical lending practices make their model highly attractive.”
“We have been consistently impressed by the team’s resilience and execution throughout a complete credit cycle. We are eager to collaborate with them to build a scalable, differentiated, and sustainable business that will positively impact millions of customers in India through digital credit and financial products.”
Future Plans and Growth Opportunities
Rishyasringa stated that the new capital will support the company’s continued growth momentum. He attributed this growth to the pandemic, as well as evolving consumer behaviors.
Capital Float, which partners with banks like Kotak and YBL for loan financing, intends to expand its network of partners.
“We foresee substantial growth potential moving forward. By providing both affordability and convenience within a regulated framework, we believe our BNPL approach can responsibly broaden access to credit for over 100 million customers engaging in online transactions,” Rishyasringa and co-founder Gaurav Hinduja stated jointly.
“We are grateful for the support of our investors in realizing this vision and are excited to collaborate in building a world-class digital financial institution for India.”
