Student microlending startup Buddy raises $500,000

Bengaluru-based student microlending startup, Buddy, announced that it has raised a Pre Series-A funding round of $500,000 from Blume Ventures, TracxnLabs and other Angels. Buddy enables college students to buy e-commerce products via short- and long-term payment plans, which they otherwise would be unable to purchase. Buddy currently has partnerships with India’s largest e-commerce players including Flipkart, Amazon and Snapdeal.
Through this funding round, it aims to expand on its credit risk & technology team in order to build the necessary infrastructure to support the rapid growth. The startup also looks towards building a stronger presence in colleges through offline marketing channels that will enable them to capture a major proportion of the online spending of students.
The company was founded in October 2015 and officially started operations in January. The startup currently has presence across 100+ colleges across Bangalore, and has 5000 active students on its platform over the last 6 weeks of operations. Buddy also has a mobile app, which provides students with an added mode of interaction.
According to Rajan Bajaj, co-founder and CEO, Buddy, “Students’ spending power has significantly increased over the last few years with Indian parents spending more on education, leading to a strong spike in consumption from these millennials. I have personally met a lot of college students who say that they don’t want to ask their parents for additional money and I can completely relate to that trend from my days at college. We have developed a very efficient process of risk management that is letting us enable this new consumption behaviour while at the same time keeping a check on our costs.”
Through its services, Buddy aims to capture a $750M market, which has the potential to grow to $5B by 2020 as e-commerce reaches $100B. Realizing the market opportunity, Buddy will also start partnering with all the online merchants and wallets to let the students use their services without making an instant payment and to buy products on credit.
“Educating students to a loan product and inculcating the responsibility of repayment is a huge game changer that Buddy is creating. We believe that Buddy has the potential to create a meaningful and trustworthy student rating system that will have far reaching consequences.” says Adit Parekh, Principal, Blume Ventures
Buddy has also worked towards simplifying the micro-lending process for students. Students just need to submit their ‘Student ID’ and phone numbers of a classmate as well as one of their parents to apply for Buddy. Borrowers who miss deadlines will receive messages from Buddy’s risk-management team. They also employ an army of 100+ part-time freelancers across Bangalore - mostly student ambassadors - to take care of operations in colleges and check on fellow students who are late on their repayments. Buddy collects and analyzes 1000+ online and offline data signals, which help segment students into different risk profiles.
The company is seeing a surge in demand with 2000+ students signing up on a weekly basis and is already in talks to raise Series A funding to scale up their operations, and work on upcoming product features.
According to Neha Singh of Tracxn, "The opportunity in India is huge as students are increasingly involved in big ticket shopping. This is where Buddy is positioned to address the gap, created by the unavailability of credit card for college students. Rajan and Deepak, both come with an experience of working in digital payments space at Flipkart & PayPal, and we trust their vision of creating an alternate payment channel for students."