Uni, founded by former PayU CEO & co-founder Nitin Gupta has raised $70 million in what is one of the largest Series A rounds by a fintech startup in India. The round was led by American venture capital firm General Catalyst.
It also saw participation from Eight Roads Ventures, Elevation Capital, Arbor Ventures, and existing investors Lightspeed and Accel. With this fundraise, Uni’s valuation has jumped seven times from $45 million to $350 million.
Uni is one of the many startups in recent times which aim to bridge the gap between India’s credit appetite and the abysmally low credit card penetration of three percent. The startup has a Pay 1/3rd card which was launched in June 2021, where it allows customers to split the costs of their purchases or bills into three parts.
While the Buy Now Pay Later (BNPL) space in India is ballooning with a host of startups extending the offering, Uni directly competes with fintechs like Slice, Simpl, and Indiabulls’ Dhani which offer a similar proposition of splitting repayments into three parts.
Uni said that the fundraise will be used to scale-up the team, invest in technology and building new category-creating products. Moneycontrol spoke with Gupta who is the founder and CEO of Uni who said that the startup is hoping to grow monthly disbursals from Rs 175 crore currently to Rs 1,500 crore in a years’ time.
“Pay in 1/3rd is a category in itself and it is still growing. Our first objective is to keep investing and growing this category and scale up the current business,” Gupta said.
Currently Uni has partnered with RBL Bank, State Bank of Mauritius, Liquiloans, and DMI Finance for its Pay 1/3rd card. The startup which is yet to get a Non-Banking Financial Company (NBFCs) license of its own, will add Yes Bank and two more NBFCs for the pay-later card.
In its next phase of growth, Uni has planned four product launches in the next four months. The first will be a credit card which will be launched in partnership with two banks, apart from growing their range of pay later cards. Gupta did not share details on the other products that the startup plans to launch.
But how will Uni set itself apart from the host of other offerings that are similar to its pay later and credit cards?
“There are only two ways for startups to stand out. One is to build a superior product that keeps doing well against competing products. That has to be complemented by being at the top of the customer’s mind by driving marketing and sales,” Gupta explained.
The credit card’s value proposition will be rewards and features. The startup will allow credit card users to pay through Unified Payment Interface (UPI) QR codes, which Gupta believes will be an important feature.
In the next 12 months, Gupta is expecting Uni’s revenue to grow to $5-6 million.
Uni’s large fundraise can be attributed to the fact that Gupta is a third-time founder with Khojguru Infotech and PayU being his previous startups. He also headed Ola’s Financial Services arm and was instrumental in building OlaMoney Postpaid.
Additionally, Uni co-founders Prateek Jindal and Laxmikant Vyas have also previously worked with Ola, Vodafone and Bajaj Finserve which has an EMI card offering. The largest Series A fundraise by a fintech was by CredAvenue which announced a $90 million raise in September 2021.
Talking about their investment in Uni, Alex Tran, Managing Director at General Catalyst said, "There are few countries in the world where the opportunity for credit expansion is as massive as in India, and we believe some iconic companies will be built to capture this opportunity in the next decade. We are excited to back a team that is world-class on credit, risk, and payments while also being hyper-focused on product and customer delight."
Uni's last funding round was a seed round of $18.5 million led by Lightspeed Ventures India and Accel Partners India.
India’s BNPL space in India is currently led by Bajaj Finance which enjoys a 54 percent share of the market. Pure-play fintech BNPL players only have a three percent share currently.
According to Bernstein, BNPL which is a $15 billion market now will grow to $100 billion by 2025 and fintechs will command a 26 percent share of that.
To regulate the space and eliminate bad players which pushed many customers to suicide over the past year thanks to high-handed loan recovery methods, a working group under the Reserve Bank of India (RBI) released a set of recommendations.
The recommendations are on three fronts – legal and regulatory, technology and financial consumer protection. The recommendations aim at ensuring that customers borrow from only verified and authentic mediums and the fintechs that fall under the purview of these norms include credit and Buy Now Pay Later (BNPL) players.
