Buddy, an online micro-lending startup that supports students with loans for e-shopping, has raised $500,000 (Rs 3.4 crore) in pre-Series A funding from Blume Ventures with participation from Tracxn Labs.
The company will utilise the capital to scale up operations and launch new product features, it said in a press statement.
Buddy, owned and operated by GaragePreneurs Internet Pvt Ltd, offers small sums of money (through tie ups with financial institutions) to college students who wish to purchase e-commerce products on monthly payment plans. The company partners with e-commerce sites such as Flipkart, Amazon and Snapdeal.
Buddy was founded in October 2015 by IIT Kharagpur graduate Rajan Bajaj and BITS Pilani alumnus Deepak Malhotra. Bajaj had a short stint with Flipkart while Malhotra worked at eBay before launching Buddy.
Students have used Buddy for purchasing products such as mobile phones, laptops, cosmetics and footwear in the price range of Rs 1,000- Rs 90,000, the company claims.
When a student searches for a product, the platform provides monthly payment options and related down payment details. Students can choose their preferred payment option and purchase the product by submitting their 'student ID'. The company also requires students to share the phone number of a classmate and a parent.
"We want to be the leader in providing student credit scores by leveraging the latest technology tools for e-verification, payments and fraud detection using data science and machine learning algorithmic models," said Malhotra.
The financial technology space has become a preferred one for venture capital and early stage investments in the country. There is heightened interest in this sector as several startups are using technology to disrupt the current systems of lending, borrowing, personal finance and financial inclusion in the country.
Digital lending platform Capzest recently raised $200,000 (around Rs 1.4 crore) in seed funding led by Lion Ventures last week.
Finectar Technologies Pvt Ltd, which runs online lending marketplace KountMoney, had raised an undisclosed amount in seed funding from Suashish Diamonds Ltd's CMD Ashish Goenka and other investors through angel network Tracxn Syndicate in November 2015.
The same month Loanbaba raised $320,000 in seed funding from an unnamed angel investor. IndiaLends, an online marketplace that connects lenders and borrowers for unsecured loans had raised $1 million in a bridge investment round led by existing investors DSG Consumer Partners, Siddharth Parekh and Gautham Radhakrishnan in October last year.
In September, Loancircle.in raised an undisclosed amount in angel funding from Toppr.com co-founder Zishaan Hayath, Trifecta Capital's managing director Rahul Khanna and other investors.