How FamPay went from having to shut down operations during the pandemic, to growing its user base 10X in months
“Yeh bacche kya baat kar rahe hain.”
(Translation: What are these kids talking about?”)
Those were the words Sambhav Jain and Kush Taneja kept hearing in their initial days of starting out as budding entrepreneurs, especially whenever they pitched their ideas in investor forums. Of course, the mother of all ironies was that the segment their startup was focused on was the one adults tended to ignore and dismiss the most: bacche (kids).
No one says that to them anymore though, now that their startup, FamPay, has gone on to become one of the biggest fintech companies dominating the teenage finance segment in India.
Launched in 2019,is a fintech solution that helps children below the age of 18 assert their own financial independence via an app that’s designed just for them. The app gives children the power to do online transactions, without having to ask their parents to input banking details, or waiting for them to give them one-time passwords (OTPs), characteristic of net banking and card transactions.
Once the user signs up on the app, a virtual card is generated for them. This virtual card can be used like a normal debit card across all online retail platforms. For offline payments, a request can be raised for the virtual card’s physical counterpart.
For parents, this meant putting their kids on a budget, and not giving them an all-access pass to their entire bank balance — teaching them an important lesson in mindful spending.
But while teaching money management and helping create financially literate adults is an important part of FamPay’s raison d'être, Sambhav says the opportunity the target market presented was untapped and brimming with potential, especially if you take into account the fact that 40 percent of India’s population is under the age of 18.
“Yet, when we talk about the next one billion people on the internet, we often forget to take into account this group. No one was building for them when we started, and we thought to ourselves ‘financial literacy far-fetched, they don’t even have basic tools to do online transactions, or even bank accounts’. So we decided to tackle that and said, let’s at least create a community which combines finance with teenagers, and then get those conversations around financial literacy going,” he tells YourStory in an interview.
He says at the time they launched, no one in the Indian fintech space was doing anything for teens, and being first movers in the space meant they could experiment to their heart’s content.
And did they have to experiment!
A few early months into their launch, when they were selling at kiosks outside schools and tapping their target audience right where they could affect them the most, COVID-19 hit — and with school shut, they had to not only shut down their manufacturing for some time, but also rethink their go-to-market strategy.
FamPay founders Kush Taneja and Sambhav Jain
When it rains… look for rainbows
For the startup world, COVID-19 has been a game of whack-a-mole, where the moles are new problems and whacking them is the solution that levels the players up.
FamPay was one of them. With COVID-19 forcing schools shut, Kush and Sambhav were forced to take a step back and re-evaluate their sales strategy. Finally, they decided to tap online marketing in a bigger way and build an audience that considered being part of the FamPay family, and holding a FamCard, a sign of prestige and high status.
The card was marketed almost as an extension of the user’s personality — it was sleek, modern, and the name on it could be customised to whatever you wanted it to be — Cat Woman, Monica Geller, Jon Snow, or whatever tickled your fancy.
On Instagram, FamPay conducted giveaways, got creators to participate or sponsored their content, partnered with teen-focused brands and held contests. The startup also offered great discounts on frequently-used platforms such as Swiggy, as well as gave attractive cashbacks in the form of ‘FamCoins’ — which was quite exciting at a time when social media was rife with discussions around CRED coins.
And those efforts paid off — from 69,542 customers in the third quarter of 2020, FamPay grew its user base a whopping 875.6 percent, or nearly ten-fold, to 678,475 users in the next quarter.
In the next three months, FamPay finally breached the one million-user mark, ending the first quarter of 2021 at 1.35 million users, and becoming one of the fastest growing startups in the country, last year.
(Design credit: YourStory's Daisy Mahadevan)
When asked what that journey was like, Kush says it has been a lot of learning crammed into a short period of time — a lot like what kids do the night before an exam.
“FamPay is the first job we’ve both ever worked. When we got out of college and started the company, we didn’t know the terms used associated with fundraising, or what a press release meant, or even what an embargo was. We learned it all on the job, and we had to learn it all while building especially because we were first-time entrepreneurs who didn’t have any connections in the industry. It has been an interesting journey,” he adds.
“I feel like I’ve done a PhD on the different types of KYC you can do,” Sambhav says.
The most important thing, the duo says, has been helping children realise they’re the ones who have to take control of their finances — and a vast majority, if not all, of their originations and sign-ups, come from kids who express interest in signing up for the platform.
Being a teen-focused startup that actually listens to them, and does not dismiss them, helps.
Will the real CTOs please stand up?
In most households today, children are playing the role of chief technology officers, and helping their parents make big-ticket purchases online, the founders say. They may not be the decision-makers, but they’re definitely decision influencers, merely because of the grasp they have on technology and all things associated with it.
“Think of your own household — if your parents want to buy a new smartphone, the first person they’ll turn to is you or your sibling because they know you’re more tech-savvy than them and you’ll have a better understanding of the specs of the phone,” Kush says.
FamPay has noticed that habit taking on another interesting form where parents are transferring monies to their kids on the app and topping up their FamCards, and then asking them to place orders on ecommerce websites or online stores on their behalf for items such as groceries and household products.
“These digital purchases are done via the FamCard, but not on things teenagers would usually spend on, which means parents are enlisting their help,” Sambhav says.
(Design credit: YourStory's Daisy Mahadevan)
How the company monetises this is interesting — by connecting brands that want to target the teenage segment, with users on the platform, FamPay helps create brand awareness. So, the next time their parents ask them to buy some orange juice, for example, they can pick a brand they’ve seen on their app that offers much better nutritional value, over an FMCG brand whose orange juice is filled with artificial sugars.
In fact, FamPay is currently working on introducing a whole new commerce section on the app that can help teenagers discover brands that cater to their specific needs — whether it’s a clean-ingredient skincare company, a mental wellness platform that can help them deal with exam stress, or an edtech platform.
These little things make FamPay a holistic platform that’s appreciated by teenagers and parents alike — and that shows in the number of transactions the startup has processed too. From 48,070 transactions in the third quarter of 2020, the Bengaluru-headquartered company grew to processing 3.8 million transactions in the April-May-June quarter — a mind-boggling 7,897 percent jump.
The startup, so far, has raised $42.7 million over two rounds from marquee investors such as Elevation Capital, Sequoia Capital India, Venture Highway, Y Combinator, Global Founders Capital, General Catalyst, Rocketship VC, and Greenoaks Capital.
“It’s only up and up from here,” says Sambhav, co-CEO of a company that had to temporarily suspend manufacturing operations at the beginning of the pandemic, and has climbed massive new heights since.