Kunal Shah-backed Niro shuts down amid regulatory hurdles, funding crunch

Kunal Shah-backed Niro shuts down amid regulatory hurdles, funding crunch

Fintech startup Niro, which helped consumer internet platforms offer embedded credit products, has shut down after 4.5 years of operations.

The Bengaluru-based firm, founded in 2021 by Aditya Kumar and Sankalp Mathur, was backed by investors such as Elevar Equity, GMO Venture Partners, Rebright Partners, Mitsui Sumitomo Insurance VC, Innoven Capital, Alteria Capital and CRED founder Kunal Shah.

Announcing the closure in a LinkedIn post, Kumar said, “$20 million in funding, $200 million in loan disbursements, 30 partnerships and 4.5 years later — we’ve had to shut down Niro.”

He described the end as the result of “a perfect storm of regulatory pushback on personal lending, credit deterioration and sub–optimal capitalisation” that hit the company just as it was pivoting its business model.

“Despite scouring the globe for capital and the country for suitors – I wasn’t able to bring this one home,” he added.

What was Niro’s model and how did it scale?
Niro’s core proposition was to help internet platforms embed credit products by partnering with banks and NBFCs — essentially turning large consumer apps into fintech distribution channels.

The company was among the early movers in this space and scaled rapidly.
“We had done the impossible: hired incredible teams, raised high–quality, patient capital, all while convincing large consumer internet platforms and industry leading lenders to work with us to unlock value at scale,” Kumar wrote.

Niro built $100 million in assets under management within just over two years of launch and saw over 170 million users flow through its platform at its peak. It had also disbursed $200 million in loans and signed 30 partnerships during its lifetime.

However, the rapid regulatory shifts in the digital lending ecosystem, combined with deteriorating credit quality and funding constraints, forced the company to change course at an inopportune time. “A perfect storm” was how Kumar summed it up.
How much funding did Niro raise?

According to data from market intelligence platform Tracxn, Niro raised a total of $18.7 million across four funding rounds, at a valuation of $58.4 million. At its peak, it employed around 290 people.

Kumar, a fintech entrepreneur with a decade-long track record, previously founded Qbera, a digital lending platform that was acquired by InCred. Post-acquisition, he headed InCred’s consumer lending business.

What challenges does this reflect in fintech?
Kumar used the post to reflect on deeper structural issues in India’s lending landscape. He argued that financial institutions “lack proprietary distribution and differentiated data for underwriting, which fundamentally makes their distribution low quality and expensive, and underwriting commoditised.”

By contrast, consumer internet platforms have solved for distribution and data, “but don’t speak (or understand) the language that financial institutions with ultra–low risk appetites, low product capabilities and increased regulatory scrutiny do.”

He added that lenders’ inability to innovate contextually only compounds these problems.

This fundamental disconnect, coupled with regulatory flux and tight capital markets, ultimately proved too difficult to navigate despite early scale.

What’s next for the founders?
Kumar expressed deep gratitude towards his investors, team, and partners. “While the list is too long to mention here, I will single out our investors who backed us repeatedly, through the most difficult times an entrepreneur can ever go through,” he wrote, naming Elevar Equity, GMO Venture Partners, Rebright Partners and others.

He also acknowledged the early team members “who joined us when we didn’t even have money or an ESOP pool” and those who stood by until the very end.

Niro’s shutdown comes at a time when several fintech startups are facing tighter regulations, deteriorating credit quality and a more cautious funding environment, which together have made scaling lending businesses more challenging.