The team at Buddy.
Buddy, a microlending startup that provides students with small loans to use on ecommerce sites, raised US$500,000 in pre-series A funding today from Blume Ventures, Tracxn Labs, and a few other angel investors. The startup was founded by Deepak Malhotra and Rajan Bajaj, ex-employees of PayPal and Flipkart respectively.
The startup analyzes over 1,000 online and offline data points in order to come up with a loan applicant’s risk profile.
The service is attempting to tackle a few issues in India at once. Without access to stable incomes, most students can’t afford to buy educational resources like laptops and mobile phones. Banks don’t cater to that kind of thing for a loan, and most students don’t have the financial credentials to apply for credit cards. Those who sign up with Buddy can take out small loans that are paid off in installments in periods of three to eighteen months. Interest rates are decided based on each student’s financial background.
The startup claims to analyze over 1,000 online and offline data points in order to come up with specific risk profiles.
Microloans for gadgets
Photo credit: Alex Jones.
Taking out microloans also helps nurture a culture of financial responsibility with minimal risk, explains co-founder Deepak Malhotra.
In order to take out a loan, students are required to submit their student ID number, a parent’s phone number, and a classmate’s phone number. Once verified, a student has to copy and paste the URL of the product into Buddy’s site or app along with the amount of down payment she’s willing to put down and the sort of time period she’s looking to spread her monthly installments across. If a borrower misses their payment, someone from Buddy’s risk management team will send out a notification and freelancers – usually student ambassadors – are assigned to college campuses to check up on students.
The market for students shopping online is currently worth around US$750 million. With ecommerce in India predicted to grow to US$100 billion by 2020, it’ll soon be worth at least US$5 billion.
Buddy claims to see over 2,000 new students using its service every week. Since it launched in January, it’s seen 5,000 student borrowers across 100 colleges in Bangalore. It has already partnered with major ecommerce sites including Flipkart, Snapdeal, and Amazon.
The latest funding will be used to build Buddy’s credit risk and technology team.
Editing by Steven Millward and Malavika Velayanikal
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