Neobanking platform Niyo is in talks to raise $100-150 million, just four months after the company raised $100 million in its Series C round, even as startup funding has slowed down owing to tough global macro conditions.
According to multiple sources, the round will value the company at $500 million and is likely to be led by private equity (PE) firm Multiples. While Niyo had not disclosed its valuation post its previous round, according to sources the company was valued at $350 million.
Niyo is also looking to acquire personal loan platform Smartcoin for anywhere between $100-120 million, in line with its plans to begin lending on its platform.
The acquisition almost doubles Smartcoin's valuation which stood at around $60 million during the company's last fundraise, as per sources.
Founded by Vinay Bagri and Virender Bisht in 2015, Niyo offers digital savings accounts, wealth management services including mutual fund investments, prepaid cards and other banking services in partnership with banks. The startup's partner banks include SBM Bank, Equitas Small Finance Bank, DCB Bank, Yes Bank and ICICI Bank.
Smartcoin offers small ticket personal loans and was founded in 2016 by IIT and IIM alumnus Rohit Garg, Amit Chandel, Vinay Kumar Singh, and Jayant Upadhyay.
The company has raised a total of $9.5 million so far from LGT Lightstone Aspada, Unicorn Ventures, Accion Venture, fintech accelerator ISME ACE and received a non-banking financial company (NBFC) licence in October 2019.
Moneycontrol had reached out to Niyo with queries, but the company did not respond. Smartcoin's response to queries is awaited.
In February 2022, the fintech raised its largest round of $100 million led by Accel & Lightrock India with participation from Beams Fintech Fund and existing investors Prime Venture Partners and JS Capital.
Niyo's second fundraise in quick succession will be rare in the current scenario where startups are finding it difficult to raise funds as investors go cautious. The situation is a stark contrast to 2021 when multiple companies raised successive rounds, leading to a jump in their valuations.
In an interview with Moneycontrol during the announcement in February, Bagri who is the co-founder and CEO of Niyo had said that lending will complete the stack of offerings from the platform.
"We already have wealth management and banking services, lending will make us a complete financial services provider," Bagri had said.
Niyo was also looking at securing an NBFC licence and in the second half of 2022 the company will look at offering insurance to its customers as well.
Bagri had added that Niyo also plans to double its tech and product capacity to build products faster. The company also wanted to spend more on marketing to grow its reach.
Niyo had said that it has around 500 employees, over 250 of which are dedicated to tech, product and design.
In the consumer neo-banking space, Niyo competes with players like Jupiter, Freo and Fi. Jupiter raised $86 million and Fi $50 million in their last funding rounds respectively. This makes Niyo's Series C round the largest fundraise in the consumer neo-banking space.
Fi is currently valued at $315 million while Jupiter is valued at $710 million.
In November 2021, Niti Aayog had floated a discussion paper on licensing and regulating digital banks. The paper suggested creating a new set of regulated entities which will function as full-stack digital banks.
However, in a public address on June 17, Reserve Bank of India (RBI) Governor Shaktikanta Das said that the suggestions came with certain risks and that the RBI currently has no proposal on these platforms.Meanwhile, the long-awaited norms on digital lending are set to be released by the RBI soon which will govern lending by fintechs such as Niyo and other digital lenders.