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Indiagold raises $12 Million for its digital gold-focused business alternative credit platform

Indiagold raises $12 Million for its digital gold-focused business
alternative credit platform

India is known for its love of gold. South Asian households are believed to own more than 25,000 tonnes of gold, whose current value is half the nominal GDP. Many of these gold coins have been stored in large metal wardrobes and locked away for decades.

Indians from all socioeconomic backgrounds have preferred gold as a way to save their money for generations. Indians have a high demand for gold. They stockpile more than any other nation. This is why India is one of the largest global importers.

This gold is used not only to save money, as it protects against the fluctuations of the financial markets, but also for credit purposes. Selling your jewelry, or gold as jewelry has an associated stigma. One is forced to sell their last financial security asset.

Another problem with gold is its insecurity.

Indiagold, a young startup that is attempting to help people put this gold to use, said on Friday it has raised $12 million in its Series A funding. Prosus’ PayU, which usually only supports deals at later stages of development — led the new round. Falcon’s Alpha Wave Incubation fund also participated. The round was also attended by Better Tomorrow Ventures and Rainmatter Capital as well as existing investors Leo Capital.

Indiagold, founded by Deepak Abbot and Nitin Murthy, former executive of Paytm, is a digital credit alternative that focuses on gold. This startup uses gold to assess the creditworthiness of customers and provides APIs for banks and lenders looking to tap this market.

Today, the startup offers two main offerings. It makes it easy and inexpensive for individuals to store their gold in safe lockers and gives them the opportunity to borrow against their gold.

After a user signs up for Indiagold, agents visit their home to inspect the gold, weigh it, and then put it into a bag that is tamperproof and has an RFID sticker. They then place the bag into a box made of steel, which is locked with the user’s fingerprint. The agent will livestream their journey from the location to their vault.

Customers will find it easy to store their gold in a lockbox. Most people are reluctant to part with their gold jewelry because of the stigma associated with yellow metal. They establish trust when they speak with an agent locking their gold and having a live stream of the journey to the safe lock.

Gupta said that trust is the foundation of his business. He said that unlike the norm of some startups, where people expect you to move quickly and break things, it is important to spend time building trust with customers.

Indiagold offers its locker for a very affordable price, just a few dollars per year as opposed to the hundreds of dollars taken by banks. Indiagold offers insurance to back customers’ gold, which is a departure from banks.

Indiagold App allows customers to see the real-time value of any gold items that they’ve stored in their locker. The startup then offers its second service. The startup provides a credit line to customers who need to borrow money within 30 seconds.

India is home to a large market for gold loans collateral. “The gold loan market is still very small despite the vast gold reserves in Indian households. Muthoot Finance holds 166 tons of gold collateral, which is less than 1 percent of Indian households’ estimated gold reserves (25k tonnes). In a report that Bernstein provided to clients, analysts explained why gold is considered a family heirloom.

Indiagold has faced many other obstacles this year, as if changing consumer behaviour wasn’t enough. Misra and Abbot said that the second coronavirus wave decimated 70% of Indiagold’s business in just a few days. Misra said, “We’ve been through quite a bit in our short trip.”

He said that business reached an all-time high in the first half of February.

Indiagold’s doorstep-based gold loan and locker products offer exceptional customer service, as well as allowing it to provide credit at lower rates. Indiagold’s rapid growth is testament to the superior products it offers and its experienced founders. “We believe that the gold lending market is ripe to disrupt and we are delighted to support Indiagold’s founding partners,” stated Navroz D.Udwadia (co-founder of Falcon Edge Capital), in a statement.

The startup is already operational in Indore and the National Capital Region. It plans to grow to 10 more cities before the end of this financial year. They are expanding their product ranges, according to the founders. PayU stated that it is exploring ways to work with Indiagold for some of its product offerings.

A few startups have begun to look into India’s gold potential. Bangalore-based Jar, founded this year, is helping young users start their journey of savings by investing in digital gold.

Publited Fri, 27 August 2021 at 05:33.04 +0000

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