Jai Kisan, an Indian startup trying to bring financial services to rural India, where commercial banks have single-digit penetration, said on Monday it had raised $ 30 million in a new round funding as it sought to expand its business.
Hundreds of millions of people in India today live in rural areas. Most of them don’t have a credit score. The professions they work in – largely agriculture – are not considered a business by most lenders in India. These farmers and other professionals also do not have a documented credit history, which puts them at risk for banks to grant them a loan.
Much of the credit these people collect ends up being invested in unproductive use, resulting in higher interest and default rates.
Three-year-old Jai Kisan, headquartered in Mumbai, is trying to solve this problem by treating farmers and other similar professionals as businesses rather than consumers.
The startup has developed its own system – which it calls Bharat Khata – which helps individuals and businesses access cheaper finance and ensures that the money they raise is used for farm inputs and equipment and to d other income-generating purposes and enable rural business transactions.
Arjun Ahluwalia, co-founder and managing director of Jai Kisan, said that financial services are crucial for these people because their entire economy depends on it. “The ability to buy now and pay later is how most people shop in India. Credit is an expectation of the Indian customer – it’s not a value-added service, ”he told TechCrunch in an interview.
“If there is formal financing for clients, it is not just the client who is successful. The whole ecosystem that revolves around this customer advantage, ”he said, highlighting the rise of Bajaj Finance, which has helped several businesses thrive in India by providing credit to customers, and Xiaomi, India’s largest smartphone provider, which shifts its inventories onto monthly installment plans.
The Bharat Khata service, which launched in April last year, had captured more than $ 380 million in annualized GTV execution rates across more than 25,000 storefronts as of March 2021, the startup said.
“Jai Kisan funded over 15% of transactions, which illustrates the monetization and quality of the trade captured. The ability to have high quality transaction visibility and virality has enabled Jai Kisan to increase its turnover by more than 50% in 3 months. The unprecedented growth trajectory is a testament to Jai Kisan’s ability to deploy capital efficiently by focusing on the core credit needs of clients, ”said the startup.
The startup, which operates in eight Indian states in southern India, is now looking to expand its presence across the country and also increase its workforce. OOn Monday, he announced that he had raised $ 30 million in a Series A round led by Mirae Asset, Syngenta Ventures and existing investors Blume, Arkam Ventures, NABVENTURES, Prophetic Ventures and Better Capital. An unspecified amount of financing was raised in the form of debt from Blacksoil, Stride Ventures and Trifecta Capital.
“Jai Kisan is poised to disrupt the rural finance industry and we are happy to be a part of their growth story. Jai Kisan’s exceptional growth, the excellent quality of its assets and its growing footprint make it a very differentiated player in the segment, ”said Ashish Dave, Managing Director of India Venture Investments for South Korean firm Mirae Asset.
“Mirae Asset has always believed in supporting companies that aim to become leaders in their category, which is clear from our other investments and we believe that Jai Kisan is on the verge of doing so for rural finance,” he said. -he adds.
As part of the new investment, Jai Kisan will also provide funding through his own books. (Like most fintech startups, Jai Kisan has so far relied on its banking and other financial institutions to finance business credit. This is why it is taking on debt in the new cycle as well.)