Yellow Metal HQ, 15th March 2023

 

With an aim to build an asset-backed lending platform for a billion underbanked people in India, Yellow Metal, a promising startup in the financial sector, has recently raised $3 million in its Seed funding round. The investment was led by MSA Novo, a multi-stage venture capital firm, to fuel the startup’s mission of revolutionising the gold loan industry along with participation from Spiral Ventures, a Japanese VC firm and existing investors WaterBridge Ventures and Java Capital. 

 

The fresh funds will help expand technology team operations across 25 new markets in and outside of Karnataka and also add new forms of asset-backed lending that are required for consumers in Rural India. They will further invest in strengthening their proprietary loan management system built for mobile phones. Arguably the first of its kind, which will enhance its customer experience. Currently, across 7 towns and opening 500 accounts each month.

 

Yellow Metal’s app makes gold loans more accessible, cost-effective, and user-friendly for Tier 2, 3 & 4 of South India. The platform ensures complete transparency in pricing, payments and collections and enables digital loan disbursements. In partnership with banks, they bring their services directly to customers' doorsteps.

 

“We are proud first partners of YellowMetal and excited to continue to partner with Nikhil and Rahul as they set out to become rural India’s most trusted financial services brand. Their customer-first thinking and deep operational expertise have helped them scale to >$1m in monthly disbursements across 7 Southern Indian towns with only $580k of seed capital. With this new $3m funding round, we are confident that they will continue to execute well and scale to 25+ towns”, said Anjali Sosale of Waterbridge Ventures, a homegrown, India-centric VC, an early backer of breakout startups like UnAcademy, Atlan, Chalo, Citymall and others.

 

“India has made great strides with UPI in solving seamless payments; however, the other half of the battle is enabling widespread consumer credit. In India where credit scores aren't commonplace, gold is often used as collateral for asset backed lending, especially in rural areas, who own more than 70% of gold in the country.

 

Yellow Metal enables these households to access cheaper credit at scale by combining existing offline network of agent with technology . We are very impressed by the scale achieved by Yellow Metal in just 1 year of operations with a limited capital outlay. The need of credit will increase as India grows and we are very confident that Yellow Metal will be able to provide a full range of asset backed credit products in the near future.”, said Prakhar Khanduja of MSA Novo

 

“Solving the liquidity needs of small-town consumers in India lends itself to massive untapped market potential. We strongly believe that Yellow Metal, with its region-based, distribution-first and tech-driven business model, is perfectly poised to capture it. We look forward to connecting the Japanese financial services ecosystem and Yellow Metal”, said Sujit Kunte of Spiral Ventures.

 

The growth trajectory of this organisation is nothing short of remarkable. Within just one year, they have expanded their operations from a single town to seven talukas and four districts in Karnataka, servicing over 5000 loans with a cumulative disbursement of over 100 crores. What's more impressive is that the majority of these loans are taken by first-time borrowers from organised lenders like banks.

 

Speaking about the recent funding round Rahul Boggaram and Nikhil Boggaram, brothers and Co-Founders of Yellow Metal, mentioned, “Building trust in the rural markets will help us become a destination for all forms of asset-backed lending. This seed fund will help us to invest more in technology that will, in turn, help build a better customer experience and a transparent product. If the company has a strong financial position, we will also be able to negotiate favourable terms from the partnerships. We are excited about the opportunities ahead and grateful for the support of our investors and partners.”

 

The Indian population has a significant amount of gold in their homes, with a value of approximately $1.4 trillion, making them asset-rich but cash-flow-poor. Rural India has over 70% of this gold, where people struggle the most to obtain loans. In the event of any need for money or emergency, many are forced to rely on friends and family or loan sharks for immediate cash. Part of the reason why so many Indians rely on unorganised lenders is because of the product complexity, Process ambiguity, Hidden pricing and banker's behaviour. However, with the recent developments in the gold lending industry and the disruption by Yellow Metal, there has been a positive shift towards financial inclusion and access to credit for historically underserved individuals and groups. Digital services, including online gold loan services, have emerged, allowing customers to apply for and receive loans remotely, providing ease and convenience. Additionally, the industry has widened its customer base, targeting new segments such as women, rural customers, and micro, small, and medium enterprises (MSMEs). This trend is a positive step towards financial empowerment and support for those who have faced difficulties in obtaining loans in the past. 

 

Prior to this, Yellow Metal raised $580k, led by Waterbridge Ventures and Java Capital. The company is headquartered in Bangalore, India and currently operates in seven towns within Karnataka state, including Chintamani, Chikkaballapura, Kolar, Dodaballapura, Malur, Hoskote and Sidlaghatta.

 

ABOUT

Founded in 2020 by Rahul and Nikhil Boggaram, Yellow Metal is a Bangalore-based gold loan startup. They offer simple, accessible, and cost-effective gold loan services that can be obtained in just 30 minutes at the customer's doorstep, with no processing fees and transparent pricing.  Their customer and loan manager app ensures end-to-end digitisation from KYC to Loan Agreements to disbursements and collections, enabling them to scale 25x faster than a local offline Gold Loan NBFC.