[YS Exclusive] Embedded finance startup Buildd raises $2M from Germany-based Picus Capital, Mankekar Family Office

Buildd, a Banking-as-a-Service (BaaS) platform, has secured $2 million in Pre-Seed funding from Germany-headquartered early-stage venture capital firm Picus Capital and the Mankekar Family Office.

The startup is also backed by operator founders, including Ranjeet Singh (Co-founder, Pratilipi), Kunal Sharma (ex-Freecharge), Nitin Agarwal (Founder, B21), Aniruddha Patwardhan (Engineering Head, PhonePe), and Kedar Swadi (Data Science Head, Phonepe).

Founded in 2020 by former banker and entrepreneur, Sachin Gaikwad, Buildd offers an embedded finance infrastructure stack to banks and technology platforms, particularly fintechs, direct-to-consumer (D2C) ecommerce platforms, Software-as-a-Service (SaaS) companies, and corporates to help them launch financial products and services. 

Getting the techie pals together 

Buildd.in is Sachin’s second venture. The banker-turned-entrepreneur had kickstarted his journey with HSBC Bank and was the Vice President of Corporate Banking for almost 12 years before starting his venture Financial Quotient, a trade finance platform, in 2012. The startup provides business analytics specific to the trade finance segment. 

Following its acquisition by a financial institution in 2013, Sachin got connected with Patanjali Somayaji and Amit Bhor, who were building personal finance management app Walnut at the time. 

Sachin instantly connected with the startup’s potential and joined the team as the chief strategy and business development officer. In 2018, Walnut was acquired by Capital Float NBFC and the teams merged. 

All along, Sachin had been evaluating a major ‘communication’ gap in the fintech market, which led to his next venture, Buildd.  

Typically, banks face challenges in conceptualising financial products that are of high frequency and based on alternate data like those being built by new-age tech platforms. Core banking systems need a middleware to sync with such companies and hence, need an intermediary layer to bring them both together. 

“We [Buildd] sit with both the partners [banks and fintechs] and help them curate products that make commercial sense besides being scalable,” he adds. 

What works to Buildd’s advantage, as per the founder, is its team of both bankers and tech experts. 

Sachin brought together his colleagues and friends from former organisations, including former Vice President - Product Management at Walnut, Vivek Kutal, who now serves as the startup’s Chief Technology Officer, and bankers Rajesh P, Arvind Khetan, Pratik Nigam.

“We have a strong team of core techies who have been on the fintech side of the world, and seasoned bankers who understand the ask of the financial institutions and challenges. This gives us unique leverage among other players as we are in complete sync with both sides of the world and play the perfect intermediary,” says Sachin. 

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What Buildd does 

The platform, which went live in 2021, offers a BaaS sandbox platform with bundled tools to partner developers, who can use its API stack to create financial products and services in a plug-and-play manner and go live in under 48 hours.

Besides the tech infrastructure, the startup takes care of compliance, security, institutions (banks, NBFCs) partnerships, underwriting and risk (in case of lending), legal, and also offers front-end services like onboarding, disbursals, collection, and escrow.

The products and services include B2B payments, credit lines (including BNPL for both B2C & B2B), and white-label products like credit cards (card-as-a-service), among others. 

The startup has tied up with some major banks and mounted API banking with Yes Bank and two large NBFCs. 

Buildd takes a percentile of the transaction value of the product or service that flows through its pipe, besides charging for white label products. It also provides API-as-a-service to smaller players at a standard monthly rate. 

The founder claims it will soon be touching an Average Run Rate (ARR) of $1 million in revenue.

“We have been revenue positive since day one. We did the soft launch with six fintechs and B2B companies as clients and have touched 19 now, with 60 others in the pipeline. We will be crossing 150 partners this year,” says Sachin. 

USP, market analysis, and competition 

Besides offering a simple DIY portal for developers, Buildd takes pride in devising a unique scoring engine for lending, that uses alternate data to underwrite. 

“We have an indigenous BNPL (buy now, pay later) score unlike a lot of other players who use bureau-based scores. Short-term financing requires a different rigour to understand the customers. Our data engine is able to give us loss rates and a predictive curve of next six months. This kind of portfolio management gives bankers the trust they need,” he says. 

Moreover, Buildd claims to have serverless technology built on AWS, which helps them with scale and security. 

“We have a flexible tech stack with standalone APIs. We do reconciliation every hour and settle the transactions the same day itself,” adds Sachin. 

A slew of embedded finance infrastructure startups or pipes has evolved in the Indian market in recent years. Some of the major players are M2P (formerly YAP), Finbox, Rupifi, Niro, Falcon, FundFina, and Switch (Open), among others. Most of the pipes are into embedding payments and lending and looking to add insurance and investment.

According to ResearchAndMarkets, India’s embedded finance industry is expected to grow by 46 percent annually to reach $4,801.8 million in 2022, as more and more non-fintech companies look to offer financial products to their customers.

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Future plans 

Buildd plans to focus more on their BNPL, card-as-a-service, and escrow offering as of now, and introduce their proprietary products—Treasury API and Hedging API. It plans to hit a revenue/ARR of $2 million in the next 24 months. 

“Our current module helps us create a vast data lake. The partnerships/integration give us the meta data (anonymous), that would help us create another scoring line for these partners as voluminous data flows through us,” says Sachin. 

The 19-member team operates from the Pune office. In order to encourage innovation, it holds special weekend workshops where the team dabbles with new technologies like Web3, crypto, blockchain, and discusses new ideas.  

Florian Reichert, Partner at Picus Capital says, “One of our core hypotheses for the Indian market is increasing penetration of financial services, hence we are excited to partner with Buildd on their mission of becoming the leading BaaS provider in the region. We believe that their banking domain expertise and fintech experience will enable them to build a superior product to deliver the underlying infrastructure for fintech innovation as well as embedded financial services.”