Up to 42% of new customers till date come at zero acquisition costs: Jupiter’s Jitendra Gupta

Jitendra Gupta, Founder and CEO, Jupiter

Neobank Jupiter’s founder and seasoned entrepreneur Jitendra Gupta on February 7 said that the neobanking platform has invested a lot in content marketing early on which helps it get 40-42 percent of its new customers at zero customer acquisition costs (CAC) till date; despite a challenging environment and low penetration of neobanks in India.

He added that for businesses such as neobanks and lending platforms to succeed and grow, apart from traditional core business fundamentals, CAC needs to be capped and strategised better.

In a conversation with Sameer Singh Jaini, founder and CEO, The Digital Fifth at the Bharat Fintech Summit 2023, Gupta said, “We invested in lot of content marketing very early on. Even one year before we launched we had channels of content being promoted widely. Our brand was known and by the time we launched we had 100,000 customers waiting to create bank accounts. That was possible only because of the content play.”

“Till date, 40-42 percent of our new customers come at zero CAC…that’s what keeps us going. If we had to incur costs on those sales, we would have been in a deeper problem.”

According to Gupta, one of the biggest challenges of building neobank-kind of platforms or products is the CAC.

“Since there is always a lag in revenue you are making and cost to the platform, cost of maintaining. On top of that if you add CAC it will become unmanageable. Your CAC has to be justified and needs to be low enough for you to survive,” he said.

Gupta added, “So when we look at our CAC, we believe that anything above $5-6 (you spent per customer) won’t add up. When we looked at CAC of banks, it’s around $12-15. Now they can afford that because they have scale, branches to support profit, bigger platforms.”

Ultimately, even when building a neobanking platform the core business fundamentals remain the same whether it’s an independent entity or a licensed entity, Gupta said. He believes deposit-related products alone won’t help the companies survive unless they are also lending, cross selling and charging fees on products.

Financially, Tiger Global-backed Jupiter, which was last valued at $710 million, clocked operating revenue of Rs 40 lakh in FY22, which was its second full year of operations.

The startup’s losses ballooned to Rs 164 crore in FY22 from Rs 14 crore in FY21. Its other expenses, which include advertising and marketing costs, software and web design costs, and customer retention expenses, increased to Rs 107.2 crore. Of this, Rs 50 crore was spend on advertising and marketing, up from Rs 1.3 crore in FY21.

Jupiter also raised Rs 100 crore in venture debt from Alteria Capital as it looks to expand business and product offerings.