How Rupifi Grew to $7.5M in Monthly Loan Volume and 25,000 SMB Customers in India (Interview with CEO Anubhav Jain)

Introduction and Guest Background

Nathan Latka

00:00Hey, 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?

Anubhav Jain

00:19>> Yeah. Really excited.

Who Uses Rupifi: The SMB Customer Profile

Nathan Latka

00:21All right. Talk to me. Paint the persona of the consumer who's taking capital from Rupifi usually.

Anubhav Jain

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.

Managed Marketplace Model and Balance Sheet Partners

Nathan Latka

01:32Got 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.

Anubhav Jain

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.

Customer Count and Growth Rate

Nathan Latka

02:12I see. And how many small businesses have taken at least a dollar through your platform?

Anubhav Jain

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.

Nathan Latka

02:33That's revenue or loans done?

Anubhav Jain

02:34>> Both.

Nathan Latka

02:35That's great. When did you when did you launch the business?

Launch Timeline and Vertical Strategy

Anubhav Jain

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.

Nathan Latka

02:55Which sector did you start in?

Anubhav Jain

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.

Nathan Latka

03:26Interesting. 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?

Average Credit Line and Transaction Size

Anubhav Jain

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

Nathan Latka

03:57And how do you guys make money on that?

How Rupifi Makes Money: The BNPL Fee Model

Anubhav Jain

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.

Nathan Latka

04:50So 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?

Anubhav Jain

05:07>> Up to you. You have full flexibility.

Nathan Latka

05:10Okay. You can pay daily.

Anubhav Jain

05:12>> You can pay it in part payments. You can pay all the amount after fifteen days.

Nathan Latka

05:16And 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.

Anubhav Jain

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.

Nathan Latka

05:57Got it. Okay. And what's the fee typically? Like on a $150, what would it be?

Anubhav Jain

06:01>> It would be 2%.

Nathan Latka

06:02So 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?

Anubhav Jain

06:22>> So 2%

Nathan Latka

06:23of a $150?

Anubhav Jain

06:25>> Yeah. Correct.

Nathan Latka

06:26I 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.

Anubhav Jain

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

Nathan Latka

06:49I of the

06:50see. Yeah, that makes sense. So, so, okay. So over the past, I guess, month, how much capital did you put out?

September Lending Volume and the Revenue Split

Anubhav Jain

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.

Nathan Latka

07:18Now 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?

Anubhav Jain

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.

Nathan Latka

07:42You keep 60?

Anubhav Jain

07:44>> No. They keep 60.

Nathan Latka

07:46Okay. 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?

Revenue Three Months Earlier: $5K a Month in June

Anubhav Jain

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.

Nathan Latka

08:28Wait, sorry. What was it? You said in May, it was how much?

Anubhav Jain

08:31>> In in June, this was $5,000.

Nathan Latka

08:35That was your revenue?

Anubhav Jain

08:36>> 5,000? Yeah.

Nathan Latka

08:37Wow.

Anubhav Jain

08:38>> It's gone more than 10 times.

Nathan Latka

08:41Well, so if you're doing 5 k in revenue, what was total GMV in June?

08:47Total loans Yeah,

Anubhav Jain

08:48>> that was close to around 100,000.

Nathan Latka

08:51Well, 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?

Key Growth Drivers: Flipkart and Walmart India

Anubhav Jain

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.

Nathan Latka

09:13Can you name a couple of those?

Anubhav Jain

09:15>> Yeah. So we work with the Flipkart Walmart Group. So all the Walmart stores in India, we are present today.

Nathan Latka

09:22I see.

Anubhav Jain

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.

Nathan Latka

09:35Do 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?

Anubhav Jain

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.

Nathan Latka

10:16I see. So the 7,500,000 loans in September, how of course, how

Anubhav Jain

10:20>> many I found this on

Nathan Latka

10:21SMB was that across?

Anubhav Jain

10:23>> Sorry. Can you repeat that?

Nathan Latka

10:25Yeah. Of the 7,500,000 loans you did in August, how many SMBs was that across?

Anubhav Jain

10:31>> That must be around 15 odd thousand.

Nathan Latka

10:3615,000? 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?

Anubhav Jain

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.

Funding Rounds: Pre-Seed, Pre-Series A, and Venture Debt

Nathan Latka

11:46Mhmm. And have you built all this bootstrapped or have you raised?

Anubhav Jain

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.

Nathan Latka

12:10Okay. So in the pre-seed round in 2020, how much was that for?

Anubhav Jain

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.

Nathan Latka

12:21Okay. Interesting. I'm curious. What the 4,000,000, what valuation was that at?

Anubhav Jain

12:27>> We've not disclosed that, but very standard series a.

Nathan Latka

12:32Well, 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?

Anubhav Jain

12:41>> Yes, something like that. Yeah.

Nathan Latka

12:42Okay. 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.

Anubhav Jain

12:49>> Absolutely.

Nathan Latka

12:50I see. I see. And where were you? What was the valuation on the million that you raised last year?

Anubhav Jain

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.

Nathan Latka

13:07Got 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?

Anubhav Jain

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.

Nathan Latka

13:49So So the three of you?

Anubhav Jain

13:51>> Three of us.

Nathan Latka

13:52Did you guys are you friends? You just put the equity 333333?

Anubhav Jain

13:56>> Yeah. It's it's a it's an equal split between the three of us.

Nathan Latka

14:00Oh, 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?

Anubhav Jain

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.

Nathan Latka

14:24Yep. Interesting. What what bank did that? Was that SVB or what's the equivalent to SVB in India?

Anubhav Jain

14:29>> So this was not from an SVB equivalent, but one of the top three venture debt funds. So yeah.

Nathan Latka

14:37Interesting. Was the cost of capital in that under 10%?

Anubhav Jain

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.

Nathan Latka

15:04Interesting. From the venture debt fund, did you have to give them warrants as well?

Anubhav Jain

15:08>> Yes. It's a very standard warrants.

Nathan Latka

15:11Interesting. 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?

Anubhav Jain

15:21>> No. We were in the yeah. In the in the one percent range.

Nathan Latka

15:26Okay. 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?

Anubhav Jain

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

Nathan Latka

16:31>> But

16:31I 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

16:56capital at under 48% interest and then make a spread.

Anubhav Jain

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.

Nathan Latka

17:21Interesting. What's the teams I say? How many people?

Team Growth: 25 to 60 People

Anubhav Jain

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.

Nathan Latka

17:33How many engineers?

Anubhav Jain

17:36So

17:36>> the engineering team would be like seventeen, eighteen people.

Nathan Latka

17:4018 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?

Retention and Churn Dynamics

Anubhav Jain

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%.

Nathan Latka

18:02Retention, retention.

Anubhav Jain

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.

Launching a SaaS Product: SaaS or B2B Payments?

Nathan Latka

18:45How 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.

Anubhav Jain

18:55>> Very soon.

Nathan Latka

18:57Oh, you are? Good. What's the product?

Anubhav Jain

18:59>> This something a lot of our partners asked for asked for it, so this is coming out very soon.

Nathan Latka

19:04And are you are you more excited about the SaaS launch or growing the lending business?

Anubhav Jain

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.

Rapid-Fire Questions and Closing

Nathan Latka

19:48Alright. Very good. We're out of time. Let's wrap up here quickly. Number one, favorite business book?

Anubhav Jain

19:54>> Sorry?

Nathan Latka

19:55Favorite book?

Anubhav Jain

19:57>> So Snowball.

Nathan Latka

19:59Number two, is there a CEO you're following or studying?

Anubhav Jain

20:04>> I follow I do follow Naval Ravikant.

Nathan Latka

20:09Number three, what's your favorite online tool for building the business?

Anubhav Jain

20:13>> Oh, okay. So that's superhuman.

Nathan Latka

20:15Number four, how many hours of sleep do get every night?

Anubhav Jain

20:19>> I do sleep quite less. So I I sleep, like, four, five hours.

Nathan Latka

20:23And what's your situation? Married, single, kiddos?

Anubhav Jain

20:26>> Married. Expecting a kid next month.

Nathan Latka

20:29Oh, very exciting.

Anubhav Jain

20:30>> Congratulations. How

Nathan Latka

20:32old are you?

Anubhav Jain

20:33>> Cute. I am 37.

Nathan Latka

20:36Thir 27 or 37?

Anubhav Jain

20:38>> 37. 37.

20:39>> 37. Last question.

Nathan Latka

20:40What's something you wish you knew when you were 20?

Anubhav Jain

20:44>> Sorry. Can you repeat that?

Nathan Latka

20:45Something you wish you knew when you were 20.

Anubhav Jain

20:49>> Okay. I wanted to be a pilot,

20:54>> but decided to be a founder rather.

Nathan Latka

21:00So so what's something you wish you knew when you were 20?

Anubhav Jain

21:07>> I I don't think I follow that. Can you can you repeat that?

Nathan Latka

21:10Sorry. 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.

Anubhav Jain

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.

Nathan Latka

21:27Mhmm.

Anubhav Jain

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.

Nathan Latka

21:37Guys, 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

21:59in 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.

Anubhav Jain

22:16>> Yep. Thank you so much. This was super fun, and thanks for having me on the show.

Nathan Latka

22:21One 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

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