New Delhi: MoneyTap, a lending app, has raised $12.3 million (about Rs80 crore) in a round led by Sequoia Capital India Advisors to expand its consumer credit line, the company said on Wednesday. Existing investors New Enterprise Associates (NEA) and Prime Venture Partners also participated in the round.
MoneyTap was founded in September 2015 by Bala Parthasarathy, former managing partner and founder of Prime Venture Partners, a Bengaluru-based seed fund. The app was rolled out exactly a year later and is available on Android platforms.
Through the MoneyTap app working professionals can avail instant loans. The loans range from Rs3,000 to Rs500,000 and are charged 15-19% interest per annum, Parthasarathy, chief executive of MoneyTap (MWYN Tech Pvt. Ltd), said in an interview.
What sets it apart from other lending start-ups is that MoneyTap offers what is called a “credit line”. In other words, it is an option to secure a predetermined un-collateralised loan instantly. The company claims to be the first to offer this service.
With the fresh funds, MoneyTap will expand to 50 cities from about 14 currently, and looks to offer credit worth Rs300 crore by March 2018.
“Today, in the banking system you either get a loan or a credit card—those are the only two lending products in the unsecured consumer lending space. What we are offering is a consumer line of credit,” Parthasarathy said.
Comparing the concept to overdraft facility in banks, he explained: “Say you get approval for Rs1 lakh, but you don’t need to take it immediately. You take it and keep it in your app. There is no fee other than a small setting-up cost, until you take the money. But let’s say you urgently want Rs25,000 sometime three months later, you just have to swipe and the money will be transferred to your bank account.”
The service is aimed at borrowers who are underserved by traditional banks and lending institutions due to their poor or non-existent credit score, the company said.
Credit Mantri and EarlySalary are other venture capital-backed platforms offering credit to largely the same audience.
Parthasarathy said that in about a year of operations the line of credit typically accorded to an individual is Rs60,000 (the highest being Rs900,000 and the lowest Rs30,000). Loans sought typically range between Rs25,000-Rs35,000 for an average tenure of eight months.
The company declined to disclose total loans disbursed so far.
“Consumer credit in India is highly under penetrated and is a complex problem to solve. MoneyTap combines an experienced team with a thoughtfully designed product—and their strong early traction is a testament to the efficacy of their approach to address this massive market opportunity,” Abheek Anand, a principal at Sequoia Capital said in a statement.