Fintech Abroad, India: $675 million invested, and how FamPay went from dorm room to board room

Fintech Abroad is a series that covers the companies, people and strategies that drive innovation in fintech outside of the United States. To read more articles in the series, tap here.

It is no surprise that the US is the dominant market and force behind the exploding financial technology sector. A large majority of technology innovation comes from the US, investors and consumers have deeper wallets and American banks have a strong grip on the regulatory affairs of global finances.

However, global fintech deal activity is on the rise, and India is the host of some of the largest fintech companies we cover on the global scene.

In the past 30 days, India’s fintech startups pulled in $675 million across 21 known venture rounds. Pine Labs was the largest recipient of funding over this period, raising $315 million from Blackrock, Tree Line Asia and other investors.

To gather more context on India’s fintech market, I talked with Kush Taneja, co-founder of teenager-focused payments service and neobank FamPay, about the country’s potential market size and how he transformed a college project into a company that pulling in one of India’s largest Series A funding rounds to-date.

From dorm room to board room

FamPay was founded in 2019 and has already raised a total of $42.9 million, including a $38 million Series A led by Elevation Capital and Sequoia Capital India in June. The company was created by Kush Taneja and Sambhav Jain, two graduates from a hotbed for up-and-coming Indian startups, the Indian Institute of Technology.

The platform is aimed at helping teens in India make payments via an app and offline in the form a numberless card. It launched its platform in July 2020 and has already seen 100% month-on-month growth rate in its first eight months.

“It’s kind of a very fresh banking experience, because our card is numberless. The app provides savings features, and kids can actually transfer money to their friends or receive money from their family,” Taneja said.

FamPay started when Taneja and Jain were helping their friends with job placement applications, and realized that finances were the largest huge decision-maker in peers’ job choices.

“We realized … what if we remove money from the equation? The decisions were quite different. Money was quite a bottleneck, and in India, from childhood itself, nobody has actually taught the generation about money — how should they look at it, how should they make decisions,” Kush said. “Neither the parents, nor the schools, nor the government actually focuses on financial literacy, and as such the teenagers fundamentally don’t know how to make decisions that independent.”

Neither the parents, nor the schools, nor the government actually focuses on financial literacy.

—Kush Taneja

Taneja says that people under 18 make up about 40% of the population in India and looked like an infinite tap when scoping out the total addressable market for their company. 

“We thought we should build for them. We should give them the infrastructure to transact, and later, slowly, we could inculcate financial literacy and behavior of responsible decisions in the future,” Taneja said.

Speaking on India’s overarching fintech sector, Taneja says there is lots of room for innovation and growth, with multiple new target segments coming into focus and new government legislation providing ways for startups to compete.

Unified Payments Interface

“The concept of UPI in India, which is known as Unified Payments Interface, helps you transact between bank accounts instantly. That was not at all available to teenagers, or users without a bank account, and has created a bridge in the ecosystem where they are able to transact freely, anywhere they want. They get a UPI handle, just like they get an Instagram username, that they can customize and can use to receive money from parents and friends,” Taneja said. India launched UPI in 2016.

Although he believes India has struggled teaching younger generations financial literacy, he thinks India’s government is doing a good job at pushing forward fintech innovation.

Compared to the US, which has multiple teen-targeted banking startups such as Till Financial, Step and Greenlight, FamPay is the only known Indian fintech that focuses on the demographic. However, it may not take long for local competition to enter the market.

“India can see much more scale, especially with UPI, it’s a great example. They are getting ready for one billion transactions a day, that level of scale, and I think big government is also helping [the startup ecosystem] a lot,” according to Taneja. “They are going into the direction where they are supporting us to innovate more and more, and bringing up new regulations which can help us build more and more products.”

General fintech activity in India

Are you an Indian startup founder, operator or investor who has news to share for our monthly India fintech update? Reach out to [email protected].

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