According to news from TechCrunch on Tuesday (August 28), the funding is an extension of a Series A round of funding in which ZestMoney raised $6.5 million. To date, the startup has raised $22 million. Investors PayU, Ribbit Capital and Omidyar Network joined Xiaomi in the fundraising round.
ZestMoney, which was founded in 2015, provides loans that focus on the consumer, with terms that are more customer-friendly than a payday loan. The company makes money when customers pay their loans back.
“New age FinTech is much more optimistic,” Lizzie Chapman, the founder of ZestMoney, told TechCrunch in an interview. “The thesis is, ‘Behave well and do good things and you’ll get cheaper pricing.’”
The market in India for tiny loans is too small for traditional banks but makes sense for ZestMoney because it can focus solely on that area of lending and attract many customers. The company has 200,000 applications each month, and Chapman noted the loans are often used to cover electronics, education and vacations. The service is designed to encourage consumers to borrow again, giving it repeat business.
Last year, Xiaomi partnered with ZestMoney to develop its Mi Finance service for its customers residing in India — work that led to this recent investment. The startup plans to raise more funding in a larger round with proceeds going to boost its business, particularly in the technology area. Chapman said the company is focusing on artificial intelligence and face and voice recognition, which will enable the company to go beyond major Indian cities and reach customers who can’t speak English well or have less experience utilizing the internet or other digital services.
Xiaomi’s investment is part of the newly public company’s pledge to invest as much as $1 billion into Indian startups during the next five years.