FinTech startup EarlySalary raises Rs 100 Cr, targets total loans of Rs 1,000 Cr by year-end

On Thursday, fintech startup EarlySalary announced it has closed a Series B funding of Rs 100 crore led by Eight Roads Ventures India. Existing investors IDG Ventures India, Dewan Housing Finance Corp Ltd (DHFL), and seed investor Ashok Agarwal also participated in the round.

Speaking to YourStory, co-founder and CEO of EarlySalary Akshay Mehrotra said the funds from this round will be used for further automating the platform, and to build a bigger loan book.

“At present, 70 percent of our entire platform is automated. With this funding, we will be building the ability to make sure that close to 90-95 percent of the platform is automated. And, we want to do this without increasing our manpower significantly.”

At present, EarlySalary has close to 70 members in its team. It plans to take this number to 80 over time. The company also plans to use the funds to build its loan book, and will look to 100,000 loans on a monthly basis by December.

According to Akshay, the company, at present, has disbursed close to 85,000 loans amounting to Rs 120 crore, and plans to take this number to Rs 1000 crore by the end of this calendar year.

The average ticket size of loans on the platform is Rs 15,600, and just last month, the company received close to 150,000 queries for short-term loan.

Founded by Akshay Mehrotra and Ashish Goyal, EarlySalary is a mobile app that allows salaried individuals to avail instant short-term loans for an average tenure of 30 days, or until the next salary cycle.

In May last year, the company raised its Series A round of funding of $4 million from IDG Ventures India (IDGVI) and Dewan Housing Finance Corp Ltd (DHFL). The company had then stated that almost 75 percent of the funds would be utilised to build its loan book, while the rest would be used to expand the team.

The platform is also actively tying up with companies to activate newer channels of sales. In the last seven months, EarlySalary received more than 1 million new app downloads, and is already working with more than 100 large employers and partners to provide instant salary advances and short terms loans to working professionals through the EarlySalary mobile app.

The founders say the company lends from its own capital, and takes care of the entire process from lending, to risk assessment and collections. Akshay adds:

“We own the money and we drive the entire product from risk assessment to collections. Hence it is a tougher model and we have to be extremely prudent in our model.”

Speaking on the investment, Dhyanesh Shah, Principal at Eight Roads Ventures, will join the board of EarlySalary. He said, “The financial services market in India is ripe for disruption, and we have been actively looking for differentiated opportunities. EarlySalary has stood out for its unique consumer proposition and exceptional management team. The company has cleverly leveraged data and technology to provide instant affordable loans to an otherwise excluded customer segment. We look forward to working closely with Akshay, Ashish and the management team at EarlySalary.”

Harshil Mehta, Joint MD and CEO, DHFL commented:

“EarlySalary has been growing at the desired pace and has scaled up the business well. As digital solutions make our lives much more convenient, innovations in customer service will be at the core of business growth. As a fintech enterprise, EarlySalary continues to bring innovative solutions in the lending space by addressing a very relevant consumer need. This is backed by data analytics, consumer insights and strong technology backbone. We continue to look forward to supporting the talented team as they work towards expanding the business.”

Looking at this calendar year, Akshay says the company plans to be wherever there is a strong customer use case to take on a short loan.

Last year, the company also experimented with product finance, allowing users to buy electronics on e-commerce marketplace Amazon. Over the next four to five years, the company aims to achieve 20 such partnerships. Akshay adds,

“We are very focused in the short term loan model and want to own the category for salary advance. We want to be solving real customer problems and want to be available at every used case. To give an example, if there is a medical emergency and you need a loan, we will be there; relocation expenses, we are working with some corporates we are working on."

There are several startups working in the short term loan category. Working on specific used cases, there is ZestMoney and Simpl which are focusing on product financing, and AffordPlan which looks at healthcare financing.