startups

Promising Fintech Startup Finomena Shuts Down Amid Funding Crunch

0
fimomena team

Bangalore-based fintech startup Finomena has shuts its shops after it failed to raise series-A funding and now it is no longer accepting new users on its website. The startup was funded by notable private equity firm Matrix Partners.

One can get an idea that how promising the startup was with the very fact that it is the only fintech company from India to have made it to “International Innovator of the Year award” by LendIt USA 2017, the world’s largest show in lending and fintech.

Launched in 2015 by IIT-Delhi graduate Abhishek Garg and Stanford graduate Ridhi Mittal, Finomena used to facilitate small ticket loans to students and young professionals for buying electronic devices and appliances and for same it had inculcated data and machine learning to reassess the creditworthiness of borrowers for the disbursal of loans.

Advertisements


Before starting finomena, both the co-founders were previously worked at places like Facebook, Microsoft, Boston Consulting Group and Bain Capital.

NOtably, Flipkart and other e-commerce firms also have a partnership with Finomena where the startup allows loan seekers to key in links of items on the e-commerce marketplace they want to buy with a loan.

“The company was in the market to raise series A funding since early this year, but that didn’t materialize. There were two buyout offers too. That failed because of valuation,” said a report by Moneycontrol.

The startup had raised its seed round from Matrix Partners and angel investors in March 2016.

The primary reasons for shut down of the startup is said to be high cash burn and moreover cost of acquisition was high for any plausible buy out.

“The startup managed to bring down the costs, but it wasn’t enough to bring up the average ticket size. Now in the second phase of expansion they need funds, but the cash burn makes it difficult,” said an analyst.

The startup was addressing loan market for young professionals and self-employed people which has market size of around $50-60 Bn.

Finomena was different from P2P lending firms but was in competition with rivals such as ZestMoney, CashCare, Capital Float, and Lendingkart, among dozen other alternate loans startups that have cropped up in the country.

Last two years have saw a lot of early stage startups shutting their shops including some heavily funded as well like Stayzilla and Askme.

The year 2017 saw a serious funding crunch for young startups as according to a latest report by Tracxn, a startup analytics firm, the number of angel and seed investments made in the first half of 2017 (January to June) is down to 260, indicating a drastic drop from 419 in the first half of 2016. Whereas, Seed funding has seen a steep decline from 278 to 152.

Earlier in May 2017, News Corp, had released Startup Deal Report Q1 CY2017. According to this report, investors prefers late stage funding. The report states, angel and seed investments fell both in volume and value terms with deal volumes reduced to half with 120 deals in Q1 CY2017 in comparison to 245 deals in the same period last year.

Like this content? Sign up for our daily newsletter to get latest updates.

Advertisements


Vardaan
Founding editor at IndianWeb2, he's been writing at IndianWeb2 since 2007. Apart from blogging he had a professional career of software developer, Ux developer and search engine marketer in past. His vision of IndianWeb2 has been laid down so as to showcase, encourage and propagate Indian startups, innovation and entrepreneurship ideas.

Top 10 Startup Funding This Week [24 – 29 July]

Previous article

10 Things in Tech You Need To Know Today [24-29 July]

Next article

More in startups

Comments

Comments

This site uses Akismet to reduce spam. Learn how your comment data is processed.