Exclusive: Unicorn India Ventures strikes second deal from Fund II, backs fintech ChitMonks

Hyderabad-based Pangean Global Services, which owns and operates fintech platform ChitMonks, has raised $650,000 in its first institutional funding round from venture capital firm Unicorn India Ventures.

The company plans to use the capital raised in this round, which it dubs a pre-Series A round, to foray into new Indian markets and for product development, and sales and marketing.

“Chit fund, as an asset class, is very close to millions of people across the country. At a time (especially after Covid-19), where digitisation is essential, we are building an inclusive ecosystem for chit fund companies to think beyond digitisation,” Pavan Adipuram, co-founder and CEO of ChitMonks, told TechCircle.

Adipuram set up ChitMonks in 2016 with Malla Reddy and Sridhar Reddy. The startup brings together chit fund companies, regulators, subscribers, banks, ecosystem enablers and service providers. 

It has developed a blockchain-based product, which helps state governments administer chit funds operations on a private permission blockchain network and enables regulators to monitor chit funds.

The firm also aims to streamline chit fund services, and make them transparent and inclusive for customers. The company claims to make processes such as payment collections, online auctions and eKYC efficient.  

According to ChitMonks’ estimates, India has about 30,000 registered chit fund companies, with assets worth Rs 1,50,000 crore under management.

The capital infusion in ChitMonks marks Mumbai-based Unicorn India’s second investment from its second India-focused equity fund, which announced its first close in March 2020. The fund made its maiden investment in SaScan Meditech at the same time. 

The second fund aims to invest in 20 companies with a ticket size of $1 million and is aiming for a final close by March 2021.

Founded in 2015 by Bhaskar Majumdar and Anil Joshi, the venture capital firm also operates a United Kingdom-India cross-border fund, called Unicorn Ascension Fund, to help startups in the UK that are looking to enter India.

Chit funds have been around for centuries as an investment tool but have never enjoyed faith and goodwill among customers -- however, they remain relevant even today, co-founder Majumdar, also managing partner at Unicorn, said. 

“When ChitMonks came to us with their idea and demonstrated the key matrix and traction they are seeing on their platform, it is clear that there is a willingness among the stakeholders to embrace digital transformation and next-gen technologies like blockchain. For us, the sweet spot is that ChitMonks is attempting to digitally empower a sector that has for long remained quite a grey area. This has been our thesis for investment in the past too,” he added.