Nexus backed Paysense acquired by PayU
Jan 13, 2020. Paysense, the market leading digital credit platform in India announced its acquisition by PayU. This represents the largest cash fin-tech acquisition in India.
Nexus was the first investor in Paysense, we partnered with Prashanth Ranganathan and Sayali Karanjkar in 2015 at the concept stage. Prashanth had the idea to leverage technology and data science to facilitate consumer credit in India, a segment dominated by banks and NBFCs who mostly rely on paper based processes and conventional data points to grant loans.
We were impressed by Prashanth’s product-first approach. Nexus has been early investor in many path-breaking companies in financial services, consumer and technology space with insights and connects in the Indian financial eco-system. Both of us shared the same philosophy of building a company focused on fundamentals of good credit principles and not just growing the loan book. As is commonly said “It is easy to give out monies, not so easy to get it back”.
Paysense has now emerged as the largest consumer credit fin tech in India. A few foundational decisions were pivotal to company’s success. Paysense identified a customer segment who would be best served by digital credit process and adopted very focused strategies to reach out to the target audience of “New to Credit” customers who were credit worthy but found it difficult to get loans from the traditional providers; for example early professionals. The company developed specialized data science models to underwrite this segment’s credit worthiness and capabilities for collections. This enabled Paysense to develop a competitive advantage in targeting these customers vs. trying to address a wider customer base with varying characteristics at an early stage
The path has not been straightforward and not everything worked to plan. The company spent time on some large partnerships which took much longer than anticipated to implement. Paysense also took the difficult decision of not pursuing some alliances that could potentially scale but did not provide adequate data for credit decisions. Paysense worked very hard to develop a fully digital / no paper process had to adapt quickly by introducing paper based processes when Supreme Court ruled that Aadhar could not be used for automated KYC. The company also had to deal with tightening of liquidity after IL&FS default. Prashanth and the teams’ agility and “Can do” attitude and focus on making their lending partners successful by giving “right loan to the right customers” has been the cornerstone of their success.
It has been a privilege to partner with Prashanth, Sayali, Team Paysense and our co-investors in building out the largest digital consumer credit platform in the country. With PayU, the company has the right strategic and financial partner in achieving their vision and we wish them continued success.
Anup Gupta, Nexus Venture Partners
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