Jar: Indian Fintech Achieves Profitability with Gold Savings

Jar: Fintech Startup Achieves Profitability Through Digital Gold Savings

Jar, a fintech company originating in India, has reached a profitable status. This success is attributed to facilitating digital gold accumulation for a substantial number of first-time investors through its mobile application.

Focus on Accessibility and Cultural Relevance

Unlike many consumer fintech companies that concentrate on wealthier, urban demographics or credit-based services, Jar has found success by providing access to an asset deeply ingrained in Indian culture – gold.

This offers a straightforward and accessible entry point into the world of saving. The company specifically targets individuals with low to moderate incomes, a demographic frequently overlooked by conventional financial institutions.

Rapid User Growth and Market Penetration

Jar enables users to begin saving in gold with contributions as small as ₹10 (approximately $0.11) daily. This strategy has resulted in a user base exceeding 35 million registered individuals across 12,000 postal codes, as stated by co-founder and CEO Nishchay AG.

Approximately 60% of Jar’s users reside in smaller Indian cities and towns, categorized as tier-2 and tier-3 locations. Notably, over 95% of these users are engaging in formal saving for the very first time, according to information shared with TechCrunch.

Financial Performance and IPO Plans

The company’s financial results demonstrate significant progress, with reports indicating plans for a public offering in the coming year. Sources indicate that investment banks are currently collaborating with Jar to prepare for its Initial Public Offering (IPO).

Revenue Growth and Diversification

Jar’s operating revenue, primarily derived from its core gold-saving application, experienced a nine-fold increase in fiscal year 2024, concluding in March, reaching ₹2.08 billion (around $23.6 million).

Furthermore, the company’s total revenue across all business segments surged to ₹24.50 billion (approximately $279.3 million) during the same period, a remarkable forty-nine-fold increase from ₹500 million ($5.7 million) in the prior fiscal year.

Expanding Beyond Core Gold Savings

This total revenue encompasses earnings from digital gold transactions, jewelry sales via its Nek platform, and fees generated through third-party distribution partnerships.

The jewelry segment represents a significant component of this diversified strategy. Launched last year, Nek offers a range of gold, silver, diamond, and lab-grown diamond jewelry across more than 8,000 postal codes, operating on a drop-shipment model with no inventory holding.

Nek generated approximately ₹1 billion (around $11 million) in annual revenue last year and continues to demonstrate consistent growth, as noted by Nishchay.

Achieving Profitability

Jar has achieved profitability after taxes for the last two consecutive quarters, as confirmed by Nishchay to TechCrunch.

Vertical Integration and Control of Value Chain

This growth is linked to a strategic shift within the company. Previously, Jar functioned primarily as a distribution platform, collaborating with a third-party digital gold provider.

The company has since vertically integrated its operations, developing an internal technology infrastructure for the direct purchase, storage, and management of gold. BDO serves as the statutory auditor, and Brinks handles custody services.

This control over the entire value chain allows Jar to capture a larger portion of the gold market value and even distribute its gold through third-party platforms, including PhonePe, a fintech firm owned by Walmart.

Strategic Partnerships and UPI Integration

Earlier this year, Jar established partnerships with BharatPe and Unity Small Finance Bank, enabling users to make digital payments – both to individuals and merchants – directly through the Jar app utilizing India’s Unified Payments Interface (UPI) system.

UPI is the leading digital payment network in India, facilitating instant bank-to-bank transfers via smartphones. This integration introduces a new revenue stream and aims to enhance user engagement and retention by expanding the app’s functionality beyond gold savings.

Leveraging UPI AutoPay for Recurring Savings

Jar has also been an early adopter of UPI AutoPay, a feature introduced by the Indian government in 2020 to enable automated recurring payments on the UPI platform.

This feature has proven beneficial for the startup, which relies solely on UPI-based payments for gold savings, driving repeat transactions from its user base, according to sources familiar with the matter.

Diverse User Base and Personalized Experience

“Daily savings is our hero feature, and that’s what most of our users use it for,” Nishchay stated regarding the contribution of UPI AutoPay to the company’s growth.

The app caters to a diverse user base, including skilled professionals in IT and manufacturing, small business owners, and daily wage earners such as electricians, plumbers, carpenters, and construction workers.

Supporting nine Indian languages, the app aims to serve users across various educational backgrounds and income levels.

Data-Driven Personalization and Gamification

Jar’s app is designed to provide a personalized experience, incorporating gamification and prompts to encourage gold savings.

“The growth team consistently built different cohorts to identify the consumer based on a lot of attributes and data signals, based on what phone you use, which location you are operating the phone, from what language, what is your consistent saving pattern, all of those things they take into consideration,” Nishchay explained.

Investor Backing and Valuation

Jar’s investors include Tiger Global, Tribe Capital, Rocketship VC, Arkam Ventures, and WEH Ventures. The company has secured $63.3 million in funding to date, as per Tracxn, and was last valued at over $300 million.