And it’s Thursday! Some cool news in store today. Following yesterday’s long-form piece on Infrastructure companies, one of the companies mentioned just raised a $15M Series A. And people are finally figuring out what Cred’s future plan for monetization might be:
➡️ So Setu is probably one of my favor recent companies in the fintech & APIs as a Service company in India and they just announced a new round raising $15M from Lightspeed, Falcon Edge & Bharat Inclusion Seed Fund.
➡️ Setu is building APIs (services that other companies can plug into) for fintech companies to collect payments (and facilitate account aggregation, digital credit, and savings coming soon). The founders (Sahil Kini & Nikhil Kumar) have also been involved in the India Stack initiative for several years.
➡️ The company also probably has the best documentation & guides out of all of the Indian Infrastructure API cos (Razorpay is probably comparable), which engineers really appreciate. I don’t think too many companies put an emphasis on developer experience so it’s heartening to see Setu do that.
➡️ I think one of the coolest products they are working on is giving companies the ability to send collection requests directly on WhatsApp. Imagine if your landlord or electricity company or kirana waala (amongst everything you purchase online or offline) sends you a request on your phone to complete the transaction. It’s so much easier than entering your credit card details or logging into net banking and akin to completing the transaction on your UPI apps.
➡️ And it’s probably cheaper for a lot of online businesses as well. Setu charges a flat fee per successful collection (~price per API request) depending on the amount of transactions the business processes (with each order of magnitude, price per collection decreases). And for companies processing collections over ₹500, it is likely cheaper to pay the fixed fee to Setu vs the payment gateway percentage to Razorpay/PayU or the likes.
➡️ And as online businesses scale up (and UPI & WhatsApp garner more users), some businesses might consider moving their entire payment stack on top of Setu to reduce operational costs and increase their margins (similar to what Finix is doing in the US)
➡️ CRED is planning to roll out a couple of new “lending” features in the coming weeks, including a flexible credit line and the ability to pay rent through your credit cards.
➡️ Contrary to popular belief (as some videos might suggest), a lot of people curios about CRED figured out that the company would eventually offer financial services on its platform (https://twitter.com/anmolm_/status/1166210267031539712).
➡️ This move definitely makes a lot of sense in the current context where there is a much higher demand for liquidity & credit. The way rental payments would work is quite simple, you would add your landlord’s UPI details on the platform and pay through your credit card with an additional fee of 1.75% (and if you think about it CRED coins can be thought of as being valued as 1% so you’re only paying 0.75%)
➡️ The company plans to roll the products out to a couple tens of thousands of users before releasing it to the remaining users on the platform. It will be interesting to see the adoption of these products. On one hand, given the pandemic people might be more open to paying fees in lieu of obtaining credit but on the other hand, I’m not super certain if landlords mind being paid late and if the the additional fees pushes away a lot of users (would be cool if users could avoid the fees by “burning” some amount of their CRED coins).
Feedback & ❤️ always appreciated
More tomorrow :) BONUS (Tweet of the day): https://twitter.com/suchitasalwan/status/1250649873919008770