Yuri Milner, the billionaire chief of global technology fund DST Global, is in advanced discussions to back gold-loans startup Rupeek, nearly doubling its valuation in less than a year, sources have said.
One of the world's most influential investors, Milner's Gemini Investments, along with other partners of DST Global, are expected to lead a round of about $45 million, valuing Rupeek between $550-600 million, sources said.
"They (Rupeek) are raising simply because there's enormous interest. They haven't even used the money from their last round. It's a financially sound model but raising money fast helps corner the market," said a person close to the deal, requesting anonymity.
Two new funds—Vostok Emerging Finance and HighSage Ventures—are also joining the round, with existing investor GGV Capital doubling down on the company, sources said.
Vostok is a fintech-focused emerging market investor, while HighSage is a Boston-based public and private market investor.
Spokespersons for Milner and Rupeek did not respond to Moneycontrol’s emails seeking comment.
Founded by Sumit Maniyar in 2015, Rupeek is the largest player in the digital gold loans space and disburses about Rs 450 crore a month compared to Rs 20 crore a year ago.
It was valued at $300 million in February 2020 when Flipkart cofounder Binny Bansal led a $60-million round with GGV Capital and early backers Sequoia Capital, Accel Partners and Bertelsmann India Investments.
The round is also likely to include an ESOP (Employee Stock Option Plan) buyback of about $5 million, giving early employees a windfall on their shares.
Rupeek is also in talks to partner with State Bank of India, the country’s largest lender, as reported first by Moneycontrol on November 10. At present, it partners primarily with Karur Vysya Bank and Federal Bank.
The lending environment has been shaky and startups have borne the brunt of aggressive lending as defaults rise and coronavirus outbreak takes its toll. But gold loans are secure by nature and hence a safer bet, investors say.
“We want to invest in technology, and I know I can bring us to profits in a couple of years. Once we achieve a certain scale (lending Rs 1,500-2,000 crore), we can replicate the playbook in each city, we will be unstoppable,” Maniyar had told Moneycontrol in an interview.
DST Global and Milner have been active in India over the last few months. Milner generally cuts smaller cheques in early-stage startups from his personal vehicles—Apoletto and Gemini. DST is exclusively a late-stage investor and has backed online learning firm Byju's and car portal Cars24 this year. Milner led an $80- million round in credit-card repayment app Cred.The deal would also cap a healthy year for startup fundraising despite the COVID-19 pandemic. According to data from Venture Intelligence, Indian startups have raised $10.6 billion this year compared to $12.5 billion the previous year.