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FamPay, a fintech aimed at teens in India, raises $38 million
How big is the market in India for a neobank aimed at teenagers? Scores of high-profile investors are backing a startup to find out.
Bangalore-based FamPay said on Wednesday it has raised $38 million in its Series A round led by Elevation Capital. General Catalyst, Rocketship VC, Greenoaks Capital and existing investors Sequoia Capital India, Y Combinator, Global Founders Capital and Venture Highway also participated in the new round, which brings FamPay’s to-date raise to $42.7 million.
TechCrunch reported early this month that FamPay was in talks with Elevation Capital to raise a new round.
Founded by Sambhav Jain and Kush Taneja (pictured above) — both of whom graduated from Indian Institute of Technology, Roorkee in 2019 — FamPay enables teenagers to make online and offline payments.
The thesis behind the startup, said Jain in an interview with TechCrunch, is to provide financial literacy to teenagers, who additionally have limited options to open a bank account in India at a young age. Through gamification, the startup said it’s making lessons about money fun for youngsters.
Unlike in the U.S., where it’s common for teenagers to get jobs at restaurants and other places and understand how to handle money at a young age, a similar tradition doesn’t exist in India.
After gathering the consent from parents, FamPay provides teenagers with an app to make online purchases, as well as plastic cards — the only numberless card of its kind in the country — for offline transactions. Parents credit money to their children’s FamPay accounts and get to keep track of high-ticket spendings.
In other markets, including the U.S., a number of startups including Greenlight, Step and Till Financial are chasing to serve the teenagers, but in India, there currently is no startup looking to solve the financial access problem for teenagers, said Mridul Arora, a partner at Elevation Capital, in an interview with TechCrunch.
It could prove to be a good issue to solve — India has the largest adolescent population in the world.
“If you’re able to serve them at a young age, over a course of time, you stand to become their go-to product for a lot of things,” Arora said. “FamPay is serving a population that is very attractive and at the same time underserved.”
The current offerings of FamPay are just the beginning, said Jain. Eventually the startup wishes to provide a range of services and serve as a neobank for youngsters to retain them with the platform forever, he said, though he didn’t wish to share currently what those services might be.
Image Credits: FamPay
Teens represent the “most tech-savvy generation, as they haven’t seen a world without the internet,” he said. “They adapt to technology faster than any other target audience and their first exposure with the internet comes from the likes of Instagram and Netflix. This leads to higher expectations from the products that they prefer to use. We are unique in approaching banking from a whole new lens with our recipe of community and gamification to match the Gen Z vibe.”
“I don’t look at FamPay just as a payments service. If the team is able to execute this, FamPay can become a very powerful gateway product to teenagers in India and their financial life. It can become a neobank, and it also has the opportunity to do something around social, community and commerce,” said Arora.
During their college life, Jain and Taneja collaborated and built an app and worked at a number of startups, including social network ShareChat, logistics firm Rivigo and video streaming service Hotstar. Jain said their work with startups in the early days paved the idea to explore a future in this ecosystem.
Prior to arriving at FamPay, Jain said the duo had thought about several more ideas for a startup. The early days of FamPay were uniquely challenging to the founders, who had to convince their parents about their decision to do a startup rather than joining firms or startups as had most of their peers from college. Until being selected by Y Combinator, Jain said he didn’t even fully understand a cap table and dilutions.
He credited entrepreneurs such as Kunal Shah (founder of CRED) and Amrish Rau (CEO of Pine Labs) for being generous with their time and guidance. They also wrote some of the earliest checks to the startup.
The startup, which has amassed over 2 million registered users, plans to deploy the fresh capital to expand its user base and product offerings, and hire engineers. It is also looking for people to join its leadership team, said Jain.
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Apple alum’s jobs app for India’s workers raises $12.5 million
A startup by an Apple alum that has become home to millions of low-skilled workers in India said on Tuesday it has raised an additional $12.5 million, just five months after securing $8 million from high-profile investors.
One-year-old Apna said Sequoia Capital India and Greenoaks Capital led the $12.5 million Series B investment in the startup. Existing investors Lightspeed India and Rocketship VC also participated in the round. The startup, whose name is Hindi for “ours,” has now raised more than $20 million.
More than 6 million low-skilled workers such as drivers, delivery personnel, electricians and beauticians have joined Apna to find jobs and upskill themselves. But there’s more to this.
An analysis of the platform showed how workers are helping one another solve problems — such as a beautician advising another beautician to perform hair dressing in a particular way that tends to make customers happier and tip more, and someone sharing how they negotiated a hike in their salary from their employer.
“The sole idea of this is to create a network for these workers,” Nirmit Parikh, Apna founder and chief executive told TechCrunch in an interview. “Network gap has been a very crucial challenge. Solving it enables people to unlock more and more opportunities,” he said. Harshjit Sethi, principal at Sequoia India, said Apna was making inroads with “building a professional social network for India.”
The startup has become an attraction for several big firms, including Amazon, Flipkart, Unacademy, Byju’s, Swiggy, BigBasket, Dunzo, BlueStar and Grofers, which have joined as recruiters to hire workers. Apna offers a straightforward onboarding process — thanks to support for multiple local languages — and allows users to create a virtual business card, which is then shown to the potential recruiters. Parikh said Apna’s AI understands the cultural nuances, helping recruiters find the best candidates for their needs.
The past six months have been all about growth at Apna, said Parikh. The app, available on Android, had 1.2 million users in August last year, for instance. During this period, there have been 60 million interactions between recruiters and potential applicants, he said. The platform, which has amassed more than 80,000 employers, has a retention rate of over 95%, said Parikh.
“Apna has taken a jobs-centric approach to upskilling that we are very excited about. Lack of accountability has been the core issue with current skill / vocational learning alternatives for grey and blue-collar workers. Apna has turned the problem on its head by creating net-positive job outcomes for anyone who chooses to upskill on the platform,” said Vaibhav Agrawal, partner at Lightspeed India, in a statement.
Image Credits: Nirmit Parikh
Parikh got the idea of building Apna after he kept hearing about the difficulty his family and friends faced in India in hiring people. This was puzzling to Parikh, as he wondered how could there be a shortage of workers in India when there are hundreds of millions of people actively looking for such jobs. The problem, Parikh realized, was that there wasn’t a scalable networking infrastructure in place to connect workers with employers.
Before creating the startup, Parikh met workers and went undercover as an electrician and floor manager to understand the problems workers were facing. That journey has not ended. The startup talks to over 15,000 users each day to understand what else Apna could do for them.
“One of the things we heard was that users were facing difficulties with interviews. So we started groups to practice them with interviews. We also started upskilling users, which has made us an edtech player. We plan to ramp up this effort in the coming months,” said Parikh, who also started an AI firm more than a decade ago to solve challenges with electricity flux and then another startup to solve for information overload. (The first startup is now being run by family and friends, and the second firm was sold to Intel, Parikh said.)
Parikh said the startup is overwhelmed each day with the response it is getting from its customers and the industry. Each day, he said, people share how they were able to land jobs, or increase their earnings. In recent months, several high-profile executives from companies such as Uber and BCG have joined Apna to scale the startup’s vision, he said, adding that the problem Apna is solving in India exists everywhere and the startup’s hope is to eventually serve people across the globe.
The app currently has no ads, and Parikh said he intends to not change that. “Once you get in the ad business, you start doing things you probably shouldn’t be doing,” he said. The startup instead plans to monetize its platform by charging recruiters, and offering upskill courses. But Parikh maintained that Apna will always offer its courses to users for free. The premium version will target those who need extensive assistance, he said. The startup also plans to expand its team.
As is the case elsewhere, millions of people lost their livelihood in India in the past year as coronavirus shut many businesses and workers migrated to their homes. There are over 250 million blue and grey-collar workers in India, and providing them meaningful employment opportunities is one of the biggest challenges in our country, said Sethi.
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