Prime Venture Partners eyes start-ups in lending space
Prime Venture Partners, a Bengaluru-based seed fund focussed on financial technology space, is scouting for investments in lending, customer support and other areas that support banks, as lenders increasingly partner with start-ups to grow their business.
In an interview, Shripati Acharya, co-founder and managing partner of the fund, said his firm’s focus is to support start-ups creating products and services that banks would otherwise not be able to offer on their own.
A case in point is MoneyTap, which raised over $12 million from Prime Venture and Sequoia India recently (bit.ly/2suJZch). MoneyTap offers a “credit line” which is similar to an overdraft facility where an applicant gets an option to avail a pre-determined credit balance at any point in future.
Acharya said banks are responding well to innovations in all sub-categories in loans from consumer to business, secured and un-secured and even credit products for millennial and salaried professionals.
“Our aim is to drive innovation in both the product side and distribution side by partnering with banks, and using the bank’s regulatory umbrella and leverage it as a fintech company,” Acharya said, adding that his firm is working to make all the portfolio companies deeply leveraged in “Aadhaar, UPI (unified payments interface), IndiaStack, e-KYC, all of such aspects that drive down costs and increase scalability”.
Started as AngelPrime in 2011, Prime Venture has its roots in fin-tech. Its founders Sanjay Swamy and Bala Parthasarathy, along with Acharya, worked on the Aadhaar project in its early days in 2010.
The year after, as they launched the fund, Prime Venture incubated EzeTap, a mobile-based point of sale device-maker for enterprise, that has since raised about $35 million from American Express and US-based Social Capital.
“We got our hands dirty fairly early in fin-tech with EzeTap and with our experience in Aadhaar we felt we could really make some innovative companies in this field,” Acharya said.
Today, the venture capital firm, which is investing from its second fund, has seven fintech firms in its portfolio of 12, including enterprise expense management solution Happay, KStart-incubated AffordPlan that offers financial planning solutions to patients, and payroll-based lending firm NiYo.
Acharya said about 40% of the total corpus raised by Prime Venture is deployed in fintech start-ups. The VC will soon announce at least four investments totalling to $5 million—two in software-as-a-service companies, and two others in cyber security and financial services, he added. Its only exit happened when Zipdial, a missed call-based marketing company, was acquired by Twitter Inc. in January 2015.
Unlike some of the other seed-stage investors, Prime Venture picks up only three-five investments in a given year, with an average cheque size of Rs4-6 crore.
“We make a few bets and go fairly deep in them,” Acharya said adding that the fund’s typical investment horizon is eight-10 years. “We take a substantial stake early on and then we invest pro rata,” he said.
In August 2015, Prime Ventures announced its second fund of Rs300 crore. Chamath Palihapitiya, a venture capitalist and former senior vice-president of products at Facebook, is the anchor investor in the fund, along with institutional investors from Silicon Valley, New York, Hong Kong and Singapore.