When Prashanth Ranganathan stepped down as CEO of fintech company PayU in 2023, he had a clear mission: to help Indian parents fund their children’s dreams of studying abroad. With this vision, the 45-year-old technologist launched his new venture Zinc Money, a startup blending wealthtech and AI.
“Every parent, every business person, every salaried person I’ve met in tier 2 and tier 3 already feel they’ve given their kids a setback by holding them in a small town. There’s a lot of ambition in these places. That’s what I’m building for,” said Ranganathan who founded Zinc Money in 2024.
This is not the first time the entrepreneurial bug has bitten him. This journey began in 2006 when he joined Dinesh Katiyar, Nikhyl Singhal, and Ujjwal Singh to build a voice messaging startup, SayNow. Soon, he decided to go solo and built his first independent venture Truvie Security, a fraud detection platform.
Ranganathan’s old teammates back at SayNow sold the company to Google, while he sold Truvie to online payments giant PayPal, taking a leadership role in the fintech company’s software ecosystem.
“As an entrepreneur, a lot of us like to be martyrs of our own business. The single most important thing is to know when to enter a business and when to get out,” Ranganathan told Mint.
He went on to start up again with PaySense in 2015 after his success with the PayPal-Truvie acquisition. The third time was also a charm, as digital payments company PayU acquired a controlling stake in Ranganathan’s consumer lending startup at a whopping $185 million valuation.
Nexus Venture Partners, one of the earliest backers of PaySense, made a big-ticket exit under the PayU deal. Nexus had invested $2.3 million in PaySense in a seed round in early 2015, and had also pumped more money into the startup across two different funding rounds in 2017 and 2018.
The venture capital firm is now betting on Ranganathan again.
Nexus is leading a $25.5 million in Zinc Money’s seed round, with participation from Quona Capital, EDBI, Global Ventures, and Saison Capital, the company said on 28 October.
This also accounts for one of the largest seed funding rounds in Indian startups in 2024, with others like Centricity, Kratos Studio and Netmagic following with $20 million seed funding each.
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The playbook
Ranganathan believes there is more method involved in his journey than just luck. Accurately gauging the value and impact of a startup idea has been the key.
“India has a ton of very successful fintechs, but they are often overcapitalized or overvalued. Even if they wanted to exit, they would probably struggle,” he said. Ranganathan added that while many fintech companies have built healthy businesses, they have raised massive funding at high valuations, making it tough for them to exit during the current funding downturn.
His comments come on the back of a plunge in startup valuations that had reached a peak during the funding boom of 2021, creating many multi-billion-dollar companies. What followed was a funding winter, when tech investors globally reduced exposure to high-growth ventures and shifted focus to profitable businesses. Many loss-making, and once highly valued startups have hence been struggling to raise funds since 2022.
“While they have a big war chest, they lack a defensible business, and it is practically impossible for them to be acquired, leaving IPO as their only real exit option,” he said.
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What’s on the cards
Ranganathan, who might have struck gold a third time, said Zinc Money is built on the intersection of wealthtech and AI, the two sectors that are honey for investors’ ears in 2024.
Sumir Verma, co-founder and managing director at investment banking firm Merisis Advisors told Mint that within fintech, weathtech is the only segment enjoying significant investment interest currently with more deals in the pipeline. “Innovation is primarily focused on wealth management, consumer lending isn’t seeing much activity,” he added. According to Verma, wealth management is benefiting from strong market tailwinds with growing wealth in India.
Consumer lending, which has been the focus area for most fintech companies in India as they attempt to earn profits, is not a hot theme at the moment with M&A activity within the segment remaining muted. “When the regulatory environment is unclear, firms tend to hold off on making significant moves,” he added.
As an entrepreneur, a lot of us like to be martyrs of our own business. The single most important thing is to know when to enter a business and when to get out.
Globally, in the third quarter of 2024, VCs invested $3.9 billion in generative AI startups across 206 deals, as per PitchBook. Meanwhile, wealthtech startups have become a darling for Indian fintech investors, with companies like Niyo, Centricity and Dezerv, among others, receiving funding in the last year.
There’s a third segment, education technology, which has seen its fair share of troubles in the past year.
Zinc Money will help families with investing and financial planning tailored specifically to meet the rising costs of overseas education. It will also help students with study abroad counselling with Ada, Zinc’s proprietary AI-powered edu-counselor. The company also plans to add lending offerings to its suite of services as it goes forward.
Interestingly, Ranganathan said that while Zinc is testing its offerings, partnering with brokerages and banks, and NBFCs, it eventually wants to build all offerings in-house.
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From a brokerage, foreign remittance services, and lending platform, Zinc has everything on cards. It aims to become a full-stack cross-border financial services platform for Indian families, offering a suite of solutions that address the financial complexities of global education, Zinc said in the statement.
The company has obtained approval for the RIA (Registered Investment Advisor) license from SEBI and an in-principle approval for the PSP (Payment Service Provider). Additionally, the company has also applied for a brokerage license from the International Financial Services Centres Authority (IFSCA) in Gift City.
“This is a long game. It requires significant amounts of capital. But if I want to impact the lives of a few billion people, you certainly cannot do it overnight,” Ranganathan said.
What is the endgame for Zinc Money? “…optimizing for a few million customers being served. Whether that happens directly through us via the venture capital highway, through a partner who can accelerate growth, or eventually through public markets, I’m open to all three options.”
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