There is a unique passion for gold in India. Homes in the South Asian market are estimated to have more than 25,000 tonnes of precious metal, valued at about half of the country’s GDP today. But most of this gold is sitting in lockers in large metal cupboards.
For generations, Indians in the socio-economic field have preferred to keep their savings – or at least part of it – in gold. In fact, it is the demand for gold in India – Indians stockpile more gold than the citizens of any other country – that the South Asian country is also one of the world’s largest importers of this precious metal.
Indians use this gold not only as a saving tool, which protects them from financial market fluctuations, but also as an asset against which they can get credit. However, selling their gold in the form of jewelry or otherwise has an ugly stain on it – “one is so broken that they had to dispose of their last asset of financial security.”
Another challenge with keeping gold at home is that it is not safe.
India Gold, a young startup trying to help people use the gold, said on Friday that it had raised 12 12 million in its Series A funding. The new round of financing was led by Process PU – which usually only supports post-stage deals – and Falcon’s Alpha View Incubation (AWI) Fund. Better Total Ventures, 3one4 Capital, Rain Meter Capital and current investor Leo Capital also took part in the round, bringing the total start-up to 14 14 million.
India Gold – founded by Netan Mishra and Deepak Abbott, two former PTM executives – is building a gold-focused digital alternative credit platform in the world’s second-largest Internet market. The startup is using gold to determine the creditworthiness of its customers and is providing APIs to banks and other lenders who want to reach this unused market.
The startup has two big offerings today: it has made it much easier and cheaper for people to keep their gold in safe lockers, and it has given them the option to borrow on their gold reserves.
Once someone signed up for India Gold, startup agents came to their home, inspected the gold and weighed it and put it in a tamper-proof bag attached to an RFID sticker. He then put the bag in a steel box and locked the customer with his fingerprint. As agents leave the premises, the India Gold app provides a live feed of their trip to their designated vault location.
The idea is that it is very easy for consumers to keep their gold in the locker. Traditionally, due to the emotional ugliness associated with yellow metal, most people are reluctant to do anything with gold jewelry. India Gold has devised a mechanism that can help them gain the trust of their customers.
“This whole business is built around trust,” Mishra said in an interview with TechCrunch. “Contrary to a rule in some areas of the startup ecosystem where you are expected to break things down and move faster, in our business we have to spend time with customers to build that trust,” he said. Falls. “
IndiaGold offers its lockers at very affordable prices – just a few dollars a year, as opposed to the hundreds taken by banks. And unlike banks, India Gold protects consumers’ gold with insurance coverage.
Consumers have access to the India Gold app where they can view real-time prices of gold items in the locker. This is when the second startup offer starts, do users need it? If these customers need to borrow, the startup provides them with a line of credit within 30 seconds.
Gold as a loan is a huge market in collateral India – and also that it is largely unsecured.
“Despite the large gold reserves held by Indian households, the gold debt market has barely scratched the surface. Less than 1 percent of gold reserves are due to the fact that gold is seen as a family heirloom and passed down through the generations, “Bernstein analysts said in a report to clients earlier this year. Written
Consumers are free to borrow only a portion of their gold reserves that they have stored in the locker. And since they know that their gold items are linked to their biometrics, they are sure that no one is breaking into the vault and melting their jewelry.
If changing consumer behavior was not a big task before, India Gold has faced many other challenges this year. Misra and Abbott said the second devastating Corona virus wiped out 70 percent of its business in just a few days. “We have come a long way in this short journey,” Misra recalled.
But by the first half of this month, business was booming, he said.
“Gold loans and gold locker products at India Gold’s unique threshold not only offer an unparalleled customer experience but also enable it to offer credit at more affordable rates. The traction that India Gold has witnessed in a short period of time is a testament to its superior production capabilities and the deep experience of its ethnic founders. We believe that the gold loan market is ready for disruption and are very happy to support the founders of India Gold.
The startup, which is currently operating in the national capital region and Indore, plans to expand to 10 cities by the end of the financial year. Both said they are also working to expand their product offerings. PayU said in a statement that it would look into ways to co-operate with India Gold on offering certain products.
A handful of startups are looking for gold opportunities in India. The Bangalore-based Jar, which was set up this year, is helping young consumers embark on a journey of savings by investing in digital gold.