#Asia Buddy offers students loans to buy e-comm products, raises US$500K

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Through Buddy, college students in India can borrow money to purchase products through monthly instalments

Team Buddy

It is hard for students in India to secure loans to purchase smartphones or laptops, which have now become essential leaning tools. The irony is that one can secure a car loan easily and at 10 per cent interest rate, but a student loan is hard to get and often comes with huge interest rates. But still no banks or NBFCs will lend you money to buy laptops or smartphones until and unless you are have costly collateral to pledge.

Bangalore-based startup Buddy aims to address this issue with its micro-lending platform. Buddy, which enables college students to buy e-commerce products via short- and long-term payment plans, has just secured US$500,000 in pre-Series A round of funding from Blume Ventures, with participation from Tracxn Labs.

With this funding, Buddy aims to expand its credit risk and technology team. The startup also looks to build a stronger presence in colleges through offline marketing channels that will enable them to capture a major proportion of the online spending of students.

The company was founded in October 2015 and officially started operations in January this year.
Through Buddy, students are provided with a hassle-free way of borrowing money and purchasing products through monthly instalments. Buddy provides students with a choice in terms of the length of the plan, ranging from three months to 18 months, and the interest rates vary accordingly.

Students just need to submit their ‘student ID’ and phone numbers of a classmate as well as one of their parents to apply for Buddy. Borrowers who miss deadlines will receive messages from Buddy’s risk-management team.

In order to make a purchase, students only have to choose the product from major e-commerce portals, and use the product URL to checkout from Buddy’s website or mobile app after entering the tenure of instalments and down payment amount. The startup has partnered with India’s largest e-commerce players, including Flipkart, Amazon and Snapdeal.

Students have used Buddy for products ranging from mobile phones and laptops to cosmetics and footwear with the product price ranging from INR 1,000 to INR 90,000 (US$15 to US$1,320).

It also employs an army of 100-plus part-time freelancers across Bangalore — mostly student ambassadors — to take care of operations in colleges and check on fellow students who are late on their repayments. Buddy collects and analyses over 1,000 online and offline data signals, which help segment students into different risk profiles.

The startup currently has presence across 100-plus colleges across Bangalore, and has 5,000 active students on its platform.

Buddy also has a mobile app.

The company claims it is seeing a surge in demand with 20,00-plus students signing up on a weekly basis.

Rajan Bajaj, Co-founder and CEO, Buddy, said: “Students’ spending power has significantly increased over the last few years with Indian parents spending more on education, leading to a strong spike in consumption from these millennials.”

“I have personally met a lot of college students who say that they don’t want to ask their parents for additional money and I can completely relate to that trend from my days at college. At Buddy, we have developed a very efficient process of risk management that is letting us enable this new consumption behaviour while at the same time keeping a check on our costs,” he added.

Buddy also plans to partner with online merchants and wallets to let students use their services without making an instant payment and to buy products on credit.

“Educating students to a loan product and inculcating the responsibility of repayment is a huge game changer that Buddy is creating. We believe that Buddy has the potential to create a meaningful and trustworthy student rating system that will have far reaching consequences,” said Adit Parekh, Principal, Blume Ventures.

Buddy is already in talks to raise Series A funding to scale up their operations, and work on upcoming product features.

The post Buddy offers students loans to buy e-comm products, raises US$500K appeared first on e27.

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