Bangalore-based Student microlending startup, Buddy has raised a Pre Series A funding round of $500,000 from Blume Ventures, TracxnLabs and other Angels. The startup enables college students to buy eCommerce products via short and long-term payment plans, which they otherwise would be unable to purchase. It currently has partnerships with Indian eCommerce players including Flipkart, Amazon and Snapdeal.
Until now, college students had no mechanism for taking micro-loans to purchase smartphones or laptops, which they require for their overall learning & development, as NBFCs do not provide them with micro-loans, and banks do not provide them with credit cards. Through Buddy, students are now provided with a hassle-free way of borrowing money and purchasing products through monthly installments. The company provides students with a choice in terms of the length of the plan, ranging from 3 months to 18 months, and the interest rates vary accordingly.
Through its services, the startup aims to capture a $750 million market, which has the potential to grow to $5 billion by 2020 as eCommerce reaches $100 billion. Realizing the market opportunity, Buddy will also start partnering with all the online merchants and wallets to let the students use their services without making an instant payment and to buy products on credit.
The firm has also worked towards simplifying the micro-lending process for students. Students just need to submit their ‘Student ID’ and phone numbers of a classmate as well as one of their parents to apply for Buddy. Borrowers who miss deadlines will receive messages from Buddy’s risk-management team. They also employ an army of more than 100 part-time freelancers across Bangalore – mostly student ambassadors – to take care of operations in colleges and check on fellow students who are late on their repayments. Buddy collects and analyzes over 1000 online and offline data signals, which help segment students into different risk profiles.
In order to make a purchase, Students only have to choose the product from major eCommerce portals, and use the product URL to checkout from Buddy’s website or mobile app after entering the tenure of instalments & down payment amount. Students have used Buddy for products ranging from mobile phones and laptops to cosmetics and footwear with the product price ranging from Rs. 1,000 to Rs. 90,000. The company is seeing a surge in demand with 2000+ students signing up on a weekly basis and is already in talks to raise Series A funding to scale up their operations, and work on upcoming product features.
The company was founded in October 2015 by Rajan Bajaj & Deepak Malhotra and officially started operations in January. The startup currently has presence across 100 colleges across Bangalore, and has 5000 active students on its platform over the last 6 weeks of operations. Buddy also has a mobile app, which provides students with an added mode of interaction.
Through this funding round, the startup aims to expand on its credit risk & technology team in order to build the necessary infrastructure to support the growth. The company also looks towards building a presence in colleges through offline marketing channels that will enable them to capture a major proportion of the online spending of students.Category Investments News