Fi, a new-age app-only banking startup founded by former Google Pay executives, is in talks to raise about $50 million, taking its valuation fourfold to $200 million, said two people aware of the matter, requesting anonymity.
Previously known as EpiFi, the startup is in talks with Falcon Edge Capital and B Capital to lead the round, while existing investors Sequoia India, Ribbit Capital and Hillhouse Capital will also participate, they said.
While Fi does not have a banking licence, it has partnered with Federal Bank for customers to open bank accounts, while Fi runs the app and related services. Fi is among a slew of neobanking startups that seek to disrupt traditional banks, which are offline-heavy, often don’t have enough digital presence and run on stodgy and sometimes bureaucratic processes.
Fi, Falcon Edge and B Capital did not respond to queries seeking comment.
Founded by Sujith Narayanan and Sumit Gwalani in late 2019, Fi offers a zero-balance savings account, ways to monitor your expenditure and segregate it and create ‘jars’ for savings. It directly competes with Jupiter, another neobank founded by former Citrus Pay founder Jitendra Gupta. Both startups count Sequoia as a common investor.
In the long term, these banks want to replace traditional banks, and make money from loans and investment products and card spends.
Fi had last raised a seed funding of $13 million from Sequoia, Ribbit and others in January 2020 at a time consumer neobanks were all the rage and raising financing based on a thesis, without a product. Many of these cater to businesses while some like Fi cater to consumers. The Covid-19 pandemic delayed some of the consumer neobanks’ launch plans but Jupiter and Fi went live earlier this year.
Fi has about 2 lakh users now while Jupiter has about 1.5 lakh, the people said, adding that Fi’s monthly cash burn was higher. Moneycontrol could not independently confirm this.
One of the persons also added that a few months ago Fi was able to add more users due to a snag at Federal Bank, which partners both Jupiter and Fi. A user was allowed to open only one Federal Bank savings account, which meant if that person used Fi, he or she couldn’t use Jupiter and vice versa. Fi went on an aggressive marketing campaign, including TV ads, which helped rope in some early users.
Federal Bank fixed the issue later and a consumer can use both now, but the hitch gave Fi an early leg-up, the person said.
While Fi has seen early traction, the focus now will be on user retention and growth prospects. For instance, while neobanks will make money via commission on debit card spends, this is unlikely to be a significant revenue generator. Whether working professionals—Fi’s target customers—will make Fi their primary bank account for their salary, expenses and investments could determine its future prospects.