Rupifi Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Anubhav Jain. He's building a tool called Rupifi. It's embedded lending and SME BNPL. He's an entrepreneur, angel investor, and credit risk professional with a decade of experience in banking consumer small business lending, including credit cards, loans, all across the lifecycle, underwriting, acquisitions, etcetera. Anubhav, are you ready to take us to the top? [00:19] >> Yeah. Really excited. [00:21] All right. Talk to me. Paint the persona of the consumer who's taking capital from Rupifi usually. [00:29] >> Yeah. So we are in the B2B space, so we essentially work with B2B marketplaces. So our customer here is a small business, and these are the mid to long tail of small businesses right now in India, but it could be anywhere in the globe across the globe. So this is a very small, like a shopkeeper or a retailer or a or an SME who's looking to, let's say, go to a digital b [00:54] >> to b marketplace or an offline B2B kind of a distributor and source his inventory or goods. And because there is a certain credit cycle in which they are able to sell those goods, they need that working capital in the form of a credit or a line. So we provide that credit line to to these small businesses. Just to give you some idea about these businesses, they are typically less than, let's say, $20,000 of annual turnover. So [01:28] >> they are really, really small guys. [01:32] Got it. And are you is are are these loans sitting on your balance sheet, or are you a marketplace? You're passing these loans off to somebody else. [01:39] >> We are a managed marketplace, so this does not sit on our balance sheet. We work with a lot of banks and non bank institutions across the country where we have a revenue and a risk sharing arrangement with them so that we onboard these customers, we provide the best customer experience, we have the technology. It's a fully embedded product that we provide. Focus being, we do the customer acquisition, we do the underwriting, we do the collections, but [02:09] >> the balance sheet is provided by the lending institution. [02:12] I see. And how many small businesses have taken at least a dollar through your platform? [02:19] >> So as of today, we have close to around 25,000 odd small businesses that have transacted with us. We've been growing at more than 200% month on month for the last quarter or so. [02:33] That's revenue or loans done? [02:34] >> Both. [02:35] That's great. When did you when did you launch the business? [02:39] >> So we launched in July 2020. It's been almost a year. So the first and because this is B2B, we go, by vertical. So we start with FMCG vertical. We scale that. We learn about that segment, then we go all out. [02:55] Which sector did you start in? [02:57] >> We started with FMCG, which is So the consumer FMCG is basically all fast moving consumer goods like grocery or all your retail products, which are being used on a day to day basis, [03:10] >> fruits, vegetables, grocery items. After that, we launched in the pharmaceuticals and health care. Then recently, we started with agriculture. We're also present in fashion and electronics. [03:26] Interesting. Take me back to some of those first loans done, FMCG factor, fast moving consumer goods. What was the average loan side and help me understand some of the terms? [03:36] >> Sure. So an average credit line that we approve for these small businesses is something of the order of $1,000 Right? And that $1,000 they utilize over multiple transactions. The average transaction size for us can be as low as $150 [03:57] And how do you guys make money on that? [04:01] >> Yeah, so this is a very short tenure transaction. It's typically for like fourteen days, thirty days, maximum sixty days. And we make money through the supplier. So it's a 0% interest or a zero cost credit to the retailer. But because we have acquired this retailer through the distributor or the B2B marketplace, So the B2B marketplace basically provides us a fee, right? Over every transaction that happens on their platform where Rupifi BNPL is being used. So it's [04:35] >> almost like the seller or the merchant is providing us some kind of a discount revenue. You know, the way you use a credit card and you get paid by the merchant. The same way when you use Rupifi BNPL, the user does not pay, but the merchant pays. [04:50] So let's just make this real. I'm a grocer in India, small shop owner. I use you guys, you know, earlier this year. I take a $150 from you, and you say, okay, Nathan, you have to pay that back in fifteen days. Do I pay that back daily, or do I just pay a $150 at the end of fifteen days? [05:07] >> Up to you. You have full flexibility. [05:10] Okay. You can pay daily. [05:12] >> You can pay it in part payments. You can pay all the amount after fifteen days. [05:16] And if you give me a 150 today, and then I pay it back in fifteen days, and I only pay back a $150, That's how that works. Right? Why wouldn't people I mean, where do how does how do people make money that there's no there's no spread? Sure. [05:30] >> So what happens is this 150 does not come into your bank account. It basically goes to your supplier and you get goods against this 150. So we are only helping you buy your inventory from your supplier. So we charge that a certain percentage from the supplier because now we are helping the supplier increase their sales by offering BNPL to these shopkeepers. [05:57] Got it. Okay. And what's the fee typically? Like on a $150, what would it be? [06:01] >> It would be 2%. [06:02] So 2%. So let me just play this back to you. I, as my local shop owner, get my bananas from banana company. Correct. I know I need X amount of bananas. I'm you're gonna give I'm gonna say, hey, guys, I wanna get a $150. Send it directly to my banana company. That banana company is gonna pay you guys a 103 what is it? $3? [06:22] >> So 2% [06:23] of a $150? [06:25] >> Yeah. Correct. [06:26] I see. And then they're getting the cash up front. It's better for them. They don't have to wait for me to pay them, and then the whole cycle goes faster. [06:33] >> Yes. So so this banana, the retailer is now going to order more because he has fifteen days of credit cycle. So he can make more orders using Rupifi so that the overall sales of the banana company goes up because [06:49] I of the [06:50] see. Yeah, that makes sense. So, so, okay. So over the past, I guess, month, how much capital did you put out? [06:59] >> So, so we've done close to $7,500,000 of lending this month in September. Right. And it's festive season coming up in India next month. So we're looking to almost again double this in October. [07:18] Now can can I take if you lend 7,500,000 out and you take a 2% fee on average, that's about a $150,000 in revenue. Now are you making that or is your balance sheet partner making that? [07:30] >> So so we share that revenue with the balance sheet partner. So we get all that revenue. Okay. And then there is a certain share of that that we give to the balance sheet partner and the remaining we keep. It's almost like a 60-40 split. [07:42] You keep 60? [07:44] >> No. They keep 60. [07:46] Okay. Balance sheet gets 60. So so got it. So 700 7,500,000 through 2% fees, a 150 k. You know, they keep 60% of that. So they're keeping $90,000, and then you're keeping, call it, $60,000, some $60,000. Yeah. That's impressive. So you guys are doing about $60,000 a month right now in revenue? Yeah, absolutely. Wow. Okay. And that's up from, I mean, where was that a year ago? Do you remember? [08:11] >> A year ago we had just started because we were just in our first couple of transactions at that point. But I can say that three months ago, this number was $5,000 So we are almost more than 10x in a quarter. [08:28] Wait, sorry. What was it? You said in May, it was how much? [08:31] >> In in June, this was $5,000. [08:35] That was your revenue? [08:36] >> 5,000? Yeah. [08:37] Wow. [08:38] >> It's gone more than 10 times. [08:41] Well, so if you're doing 5 k in revenue, what was total GMV in June? [08:47] Total loans Yeah, [08:48] >> that was close to around 100,000. [08:51] Well, so you went from 100,000 in loans done in June to three months later, you're like, it's 7,500,000 in loans done in the month. Yeah. What would you credit that growth to? [09:00] >> So I think it's a mix of a few things. One, we've kind of now expanded to some of the very large players. We work with a couple of the largest B2B marketplaces in India. [09:13] Can you name a couple of those? [09:15] >> Yeah. So we work with the Flipkart Walmart Group. So all the Walmart stores in India, we are present today. [09:22] I see. [09:24] >> Entire Flipkart e commerce platform on the B2B side we are present today. So those are some of the very large partners that we work with. [09:35] Do you own the relationship with me, the shop owner? Do you have my email address? Do have my information? Or do you just own the relationship with the banana provider? [09:46] >> We own both. So to begin with, we go to the banana provider. They tell us that, hey, I have these many customers. Can you provide them a BNPL option? Once they provide those details with us, we get a consent from the from the individual shopkeepers. We collect their data. We get their KYC done. We offer them a credit. And then now I have complete ownership of individually all those SME customers. [10:16] I see. So the 7,500,000 loans in September, how of course, how [10:20] >> many I found this on [10:21] SMB was that across? [10:23] >> Sorry. Can you repeat that? [10:25] Yeah. Of the 7,500,000 loans you did in August, how many SMBs was that across? [10:31] >> That must be around 15 odd thousand. [10:36] 15,000? Yeah. Wow. Okay. Got it. Now, how do you I mean, how do you grow this thing? Right? So how do you go to, like, you know, a 100,000,000 out each month? [10:47] >> Yes. Think few things. One, we continue to work with some of the largest b to b marketplaces in the country. So so that's something we will continue to do across sectors. We'll get the largest partners. So for example, there are a lot of large B2B marketplaces coming up. We go to them, we embed Rupifi on the checkout page of their journey. So whenever a new small business comes and transacts with them, they will always see Rupifi [11:16] >> as a payment option or a checkout option. That's number one. The number two is we want to convert this online offering to an offline offering as well. So we want to offer this even for a small business which enters, let's say, a cash and carry store and they want to make this transaction using credit at the point of sale. So we are now launching an offline BNPL as well. So we want to be omni channel. And [11:42] >> I think in the next couple of years, that's where we would be. [11:46] Mhmm. And have you built all this bootstrapped or have you raised? [11:50] >> We raised we raised a couple of rounds. So we started with a with a pre seed from some of the well known angel investors in the country. And then we raised a pre-Series A from a couple of financial investors back in March. So yeah. And we've just raised venture debt last week. [12:10] Okay. So in the pre-seed round in 2020, how much was that for? [12:14] >> That was a little less than 1,000,000. And earlier this year, we raised a pre-Series A there. That was around $4,000,000. [12:21] Okay. Interesting. I'm curious. What the 4,000,000, what valuation was that at? [12:27] >> We've not disclosed that, but very standard series a. [12:32] Well, that's actually why I asked. I'm not sure. I mean, are you seeing the same multiples in India that we're seeing here in The States? Like, did you sell, what, 20% of the business for four million? Something like that? [12:41] >> Yes, something like that. Yeah. [12:42] Okay. Got it. Got it. So you're talking like, I I won't push too hard here, but you're talking like something between like a 16 and $20,000,000 pre money valuation. [12:49] >> Absolutely. [12:50] I see. I see. And where were you? What was the valuation on the million that you raised last year? [12:56] >> Again, that was also at an idea stage with not a single line of code written, so between 10 to 15% dilution there. [13:07] Got it. Got it. Yeah. You're typically seeing those rounds be like, you know, 4 to 6,000,000 sort of range. You were in that range. Yeah. Got it. And and flush out the team at that point. I mean, was just you and a co founder or what how many co founders you have? [13:19] >> I have couple of co founders. So I look at the financial aspects of things because being a risk guy, I try to manage all the other risk collections sort of things. I have a couple of co founders. One of them was with Google, core technology guy. He worked with Google for nine years in Google Docs, Google Spreadsheets. Oh, wow. And machine learning. So he looks at technology. And I have another co founder who worked with a [13:46] >> lot of Indian startups scaling their products. So he's the product guy. [13:49] So So the three of you? [13:51] >> Three of us. [13:52] Did you guys are you friends? You just put the equity 333333? [13:56] >> Yeah. It's it's a it's an equal split between the three of us. [14:00] Oh, very good. Okay. That's that's a great that's a great way to do it. Okay. Cool. And then talk to me a little bit about the venture debt round you just raised. How much was that for? [14:07] >> Again, so venture debt is typically backed with an equity round earlier. So so we raised a 4,000,000 equity and in India, it's a when you raise x equity, you get 25% of that in venture debt. So this is a million venture debt that we just did. [14:24] Yep. Interesting. What what bank did that? Was that SVB or what's the equivalent to SVB in India? [14:29] >> So this was not from an SVB equivalent, but one of the top three venture debt funds. So yeah. [14:37] Interesting. Was the cost of capital in that under 10%? [14:41] >> No. Really? It's a little higher. But I think considering the cost of capital that we would get from a bank, [14:52] >> it's very much in line with that. So if we were to borrow from a bank unsecured today, I think we'll not get it at a rate lower than what we are getting from the venture debt. [15:04] Interesting. From the venture debt fund, did you have to give them warrants as well? [15:08] >> Yes. It's a very standard warrants. [15:11] Interesting. I do I, you know, I see I don't know what our standard warrants are anymore. I see them all over. I see ones low as 1%, and I see some as high as, like, 7% warrants. Where were you guys? [15:21] >> No. We were in the yeah. In the in the one percent range. [15:26] Okay. So you were okay. Got it. I would say that's a good deal then. So so 1%, but cost of capital more than 10% from an Indian sort of credit fund effectively. Interesting. What are capital markets like in India right now for this kind of things? I mean, can you go raise If you want to start doing this off your own balance sheet, could you go raise $100,000,000 at 7% and start lending this money directly? [15:47] >> It would not be easy because the cost of capital, if we were to do this on our balance sheet, would be fairly higher. So but I think the good part about that is that you would have good flexibility in terms of how you run your balance sheet. Because today when we work with banks and NBFCs, we don't get 100% flexibility in the kind of segments we want to go after and the kind of processes we want [16:10] >> to run. So banks have a lot of controlling power on that. But I think if I were to do this with my own balance sheet, it would have been at least 300 to 400 basis points higher in terms of cost. So I think we really it's it's all about what do you want to optimize for on day one. Do want to optimize for cost? Do you want to optimize for for risk? Or do you want to [16:31] >> But [16:31] I know you have such a good model, right? I mean, for a couple of reasons. One, this is effectively a loan product with a very quick payback, fourteen to thirty days. Most loan products are like a year, twelve months or something longer. You have quick payback, you charge 2%. So if you charge 2% on a fifteen day facility, right? That's 4% monthly multiplied annually. That's a 48% effective interest rate. I mean, you could definitely go raise [16:56] capital at under 48% interest and then make a spread. [17:00] >> Yeah. Absolutely. So I think that's that's the idea that, Nathan, so we'll we'll build our risk models. We'll prove that, you know, what we're doing this works. Then we'll apply for a license sometime, raise our own capital under our own balance sheet and, you know, and then maybe do a co lending or a onward lending kind of an arrangement. [17:21] Interesting. What's the teams I say? How many people? [17:24] >> We've recently grown quite rapidly. I think if you ask me this question three months back, we were 25. Today, we are around 60 odd people in the team. [17:33] How many engineers? [17:36] So [17:36] >> the engineering team would be like seventeen, eighteen people. [17:40] 18 people. Interesting. Very cool. What about how do you measure churn on this? Do you just say, hey, how many of our $25,000 25,000 customers take at least a dollar every month? [17:49] >> Yeah. Yeah. So we keep on looking at how many of the active transacting SMEs transacted again next month. That number for us is around 80%, 85%. [18:02] Retention, retention. [18:03] >> Retention [18:04] >> is 85%, which is which is, I think which is, I think, Okay. At this stage, though, it should be higher because we are giving them credit at no cost. But what we also see is that churn typically happens in three months. After that, we don't see much churn. So let's say I acquire you today. There will be a 15% churn month two and another 15% month three and month four. So that three months we'll see a [18:32] >> churn. But after that, the portfolio pretty much remains with you. They keep on transacting because because somebody who has transacted for three consecutive months with you, they'll transact every month because it's a very sticky product. [18:45] How about when are when are you launching a SaaS product to help these grocers and small businesses run their business? That way, you have a percent of GMV model, embedded fintech, and also SaaS in one shot. [18:55] >> Very soon. [18:57] Oh, you are? Good. What's the product? [18:59] >> This something a lot of our partners asked for asked for it, so this is coming out very soon. [19:04] And are you are you more excited about the SaaS launch or growing the lending business? [19:10] >> Oh, that's a tough one to answer. I'm actually excited about both right now because both are good experiments for us. SaaS was something we discussed quite a lot because we thought, do we really want to be a SaaS company? Do we want to be a more B2B payments company? Because BNPL is just a payment instrument, right? For these businesses. So are we a more B2B payments company where we make money on every transaction? Or are we [19:36] >> a more SaaS company where we make money on subscription? So I think we're still figuring that out. We're still just a year old company. So we're quite young to to say whether this is exciting versus that is exciting, I think. [19:48] Alright. Very good. We're out of time. Let's wrap up here quickly. Number one, favorite business book? [19:54] >> Sorry? [19:55] Favorite book? [19:57] >> So Snowball. [19:59] Number two, is there a CEO you're following or studying? [20:04] >> I follow I do follow Naval Ravikant. [20:09] Number three, what's your favorite online tool for building the business? [20:13] >> Oh, okay. So that's superhuman. [20:15] Number four, how many hours of sleep do get every night? [20:19] >> I do sleep quite less. So I I sleep, like, four, five hours. [20:23] And what's your situation? Married, single, kiddos? [20:26] >> Married. Expecting a kid next month. [20:29] Oh, very exciting. [20:30] >> Congratulations. How [20:32] old are you? [20:33] >> Cute. I am 37. [20:36] Thir 27 or 37? [20:38] >> 37. 37. [20:39] >> 37. Last question. [20:40] What's something you wish you knew when you were 20? [20:44] >> Sorry. Can you repeat that? [20:45] Something you wish you knew when you were 20. [20:49] >> Okay. I wanted to be a pilot, [20:54] >> but decided to be a founder rather. [21:00] So so what's something you wish you knew when you were 20? [21:07] >> I I don't think I follow that. Can you can you repeat that? [21:10] Sorry. I mean, it just sounds like you want to start a company faster. I'm just asking something you wish you knew back when you were 20 years old. [21:15] >> Oh, okay. Something I knew I wish I knew at when when I was 20. I think [21:21] >> that that would be that, you know, speed is the most important thing. [21:27] Mhmm. [21:28] >> I hope I knew that at that time that, you know, nothing is more important than speed in a startup. Even if you make mistakes, but if you're fast enough, that's that's great. [21:37] Guys, we have it. Rupifi dot com giving lending instruments to small businesses in India. They did, call it, a $100,000 of loans three months ago, but this month or last month in August, they did about 7,500,000. They make 2% on that, so $150. They give 60% of that to their partners, their balance sheet partners, so call that 90,000. They keep 60,000. So they went from basically 5 ks a month in revenue to $60,000 a month in revenue [21:59] in the past six months. They're growing very quick, raised a seed round last year, standard terms, a million raise, know, call it around a 5,000,000 valuation, raised another 4,000,000 this year as they continue to scale. Sold, call it 10 to 20% of the business on that round. Now a team of 60 as they get ready to launch their SaaS product. Anubhav, thanks for taking us to the top. [22:16] >> Yep. Thank you so much. This was super fun, and thanks for having me on the show. [22:21] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM [22:47] Central. Additionally, remember these recorded founder interviews go live. 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Feel free to let me know what you thought about this episode. If you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We [23:50] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.