Indian Unicorns 2022: slice Focuses on Expanding Credit Card Services in India

According to a recent PwC report, India is one of the fastest-growing economies in the world, but there exists a significant gap in accessing formal credit, especially when compared to other developed nations. Banks and financial institutions are helping fill this gap by introducing new payment products and instruments that make it easier for users to access formal credit. Recently, these institutions have shifted their focus towards instruments like credit cards. Credit card issuance has grown in the country by 20% annually over the last four years. The number of credit cardholders increased from 29 million in March 2017 to 62 million in March 2021. New FinTech players are also disrupting the market by introducing new and innovative products and offerings to consumers. slice is one such new fintech player focusing on India’s youth.

slice’s Offerings

Founded in 2016 by Deepak Malhotra and Rajan Bajaj, slice is a Bangalore-based credit card company that is focused on millennial purchasing and finance habits. The Indian credit card market is not very mature. In 2020, the country had more than 1 billion debit cards in use, but only about 50 million credit cards are in circulation. slice is helping bridge that gap by providing credit card access to the young millennials of the country.

slice offers a prepaid card that comes with a pre-approved credit line. It helps people such as students, freelancers, startup employees, and blue-collar workers get access to credit cards and help them with paying bills, managing expenses, and gaining instant rewards. Its cards are just a means to help build credit scores for these users. slice hopes that by building better credit scores for its users, it will be able to make them eligible for better credit cards from other firms and banks and enable them to secure loans for various purposes.

It uses a simple and transparent app to help members with easy transactions. To disrupt the credit card landscape, slice launched slice cards and slice super cards that allows users to split their total amount into 3 easily payable sums of money. The company is on a mission to ease access to credit in India by helping students get credit options to buy items like books, laptops, and phones, which they can repay in monthly installments. Its goal is to create a transparent, modern, and simple financial platform for the youth of India.

slice crossed the one million mark of transactions through its app within 5 months after the launch of its first physical card in May 2019. 60% of the transactions on its card were done offline and the rest 40% were done online back then. It currently has a user base of over 5 million.

slice’s Financials

slice is issuing over 200,000 cards each month, which makes the startup the third-largest card issuer in India. It has a waitlist of over a million users. It earns revenues from interest charges, fees from EMI partners, late fees, and commissions earned from the partner merchants. Its revenue from operations was INR 35.35 crore (~ $4.7 Million) in FY21, compared with INR 29.88 crore (~$4 million) in FY20. It reported a growth of 15-20% each month.

slice has raised $291.2 million in 11 rounds of funding led by Blume Ventures, Gunosy Capital, Sunley House Capital Management, 8i Ventures, Tiger Global Management, Moore Strategic Ventures, Anfa, Insight Partners, Niyogin Fintech Ltd., and Credit Saison. Its most recent round was held in November 2021 where it raised $220 million at a valuation of over $1 billion. slice plans to use the funds to expand its product offerings. It plans to launch support for UPI, a payments railroad developed by a coalition of retail banks, one of the most popular ways Indians transact online. It is also looking at launching some new cards, one of which may be focused on teens.

Clearly, current revenues don’t justify the company’s valuation. Investors are betting on the privileged relationship the company is creating with a valuable customer base with the idea that customer lifetime value is likely to be astronomical. Monetization prospects not only include the ones they’re currently experiencing, but also can expand to hyper-targeted advertising. Other loan products like car and home loans would become natural extensions to the current portfolio of offers.

Let us see if this investment thesis pans out. The current tendency of investors flushing companies with funding doesn’t always work out. It depends very much on the maturity and self-restraint of founders whether they can keep their heads steady at the face of too much money coming in too easily.

Death by overfunding has historically killed many companies. In India, currently, money is flowing a lot faster than the Ganges. In that flow, it is often tempting to forget about the fundamentals.

Let us hope the easy flow of capital becomes additive, and not a colossal wastage of time, and a distraction from the industry’s progress.

Photo Credit: TheDigitalWay from Pixabay

This segment is a part in the series : Indian Unicorns 2022