Why did we invest in Vegapay?

Vegapay is a comprehensive omni-stack that aims to utilise embedded technology to liberate their partnered companies, and financial institutions from all technical barriers that accompany launching credit cards. This will help them better the massive proportion of our population that is still credit unserved.

While there are quite a few reasons which prompted our investment, below is a discussion on a few key factors which formed our investment thesis for Vegapay.

1. The Rise and Rise of Credit Cards in India

If fintech is the greatest success story in the Indian start-up ecosystem, lending has to be the jewel at the top of its crown. Within the lending segment, there is particular interest in the credit card sub-segment which has been witnessing stellar growth.

Spurred by a grossly underserved market, growing per-capita income, and greater financial literacy nationwide, the credit card transactions value has grown from $57.4 billion in 2018, to $91.3 billion in 2022. It is further projected to grow to become a $325 billion opportunity in 2026. (INR per $ = 80)

Despite the meteoric increase in the issuance of credit cards, there is still a wide gap to be addressed. This is evidenced by the fact that about 50% of the adult population in India is credit unserved.

Vegapay have created an innovative solution which uses their best-in-class loan underwriting, and management solutions to launch co-branded cards. These would be embedded for their partners, and banks which represent the lion’s share of the market.

This solution has the capability to make the entire sub-segment considerably more accessible, and unlock the true potential of this wide market.

2. Embedded Finance’s Utility

To put it simply, Embedded finance means integrating financial services within the offerings of a non-financial organization.

Due to how lucrative particular sub-segments within fintech have turned out to be (particularly lending), numerous non-financial organisations have sought to incorporate fintech solutions within their platforms to optimise their revenue streams.

As a testament to how lucrative the market can be, and the rapid pace of digitization that propels it forward, the global embedded finance industry is expected to reach $7 trillion by 2030.

However, due to the old legacy tech utilised by many existing solution stacks in the market, the domestic embedded finance market has had to face some operational obstacles which have made it highly inefficient. Legacy tech is tightly-coupled, less adaptive, and non-comprehensive, which is why users are often extremely dissatisfied with the existing solutions.

This is where Vegapay shines.

Due to its highly seamless plug-and-play based design, it can be easily employed by companies and financial institutions. Moreover, Vegapay’s solution is simultaneously highly adaptable as it can be customised to any vendor’s needs instantly, and impressively comprehensive due to the numerous use cases where it can be applied.

This makes Vegapay the best solution for every company looking to adopt embedded finance solutions in their products and services.

3. An Outstanding Team

As mentioned above, building a product this comprehensive is an extremely challenging task. Moreover, since this is a market which necessitates a deep understanding of the segment, and a deep knowledge of legacy technology, quickly iterating, and facilitating a swift 0–1 journey are extremely important traits that a founding team needs to possess. The founding team of Vegapay embodies these qualities in abundance.

Vegapay was started by four people: Gaurav Mittal, Abhinav Garg, Himanshu Agarwal, and Puneet Sharma.

Gaurav is an extraordinary leader, whose last stint was as the Head of Growth at Zeta. Prior to this, had worked at MasterCard, Amex, and ICICI Bank wherein he demonstrated exceptional acumen, and stewardship to help them accelerate their growth. He is particularly renowned within the ecosystem as one of the finest administrators.

Abhinav is an IIT Roorkee alumnus, who has overlooked tech responsibilities in numerous previous roles, most notably at PayPal. He also worked as the CTO at another impressive start-up — Podeum. From our conversations, it was clear that his heart lies in building exceptional products that solve immense problems.

Himanshu, having graduated from IIT Kanpur, had spent considerable time at Amazon, serving as the Senior Software Engineer to empower their visions. He was a part of the team that managed Alexa. He demonstrated considerable technological expertise, and a precise vision during our correspondences.

Puneet has impressive demonstrable experience in leading from the front. He had served as the Director of Product at BharatPe prior to joining Vegapay, wherein he was able to garner a stellar reputation as a leader. He is also an experienced founder. Prior to Vegapay, he had started two companies — Localinger (a mobile app for hyperlocal discovery of second-hand goods), and GoRenew (a platform for replacing or renewing the registration for a motor vehicle, vessel or mobile home).

In the infrastructure business, both the performance of tech, and a strong distribution capability are extremely important. The team of Vegapay furnish both in abundance.

All in all, Vegapay have one of the most impressive, and multi-faceted teams in the entire ecosystem.

4. A Peerlessly Comprehensive Product Plan

Vegapay is building a comprehensive omni-stack with a specific focus on creating the most seamless card-management solution in the market. Its plug-and-play format is to make it as intuitive, and seamless as possible for both stalwarts in the space, and new entrants.

Unlike their major competitors who focus only on one of the below aspects, Vegapay is aiming to create a single platform that can cater to all of them in a hitherto unprecedented manner:

1. Lending Stack: They have created a holistic lending stack which provides an LMS (Loan Management System) tool with various SDKs and APIs, this would take care of the whole user journey from underwriting to collections.
2. Core Card Processing: With core card processing, they include over 4 services which will allow them to launch co-branded cards for their clients and manage it end-to-end.
3. Pay-outs: With Pay-outs they will be able to complete the cycle of payments and truly become an omnistack.

The 3 stacks as explained above shall help the players easily go live with their lending offering due to the pre-built APIs offered by Vegapay.

Moreover, Vegapay is also extremely adaptable. They use micro-services driven architecture to be able to adapt the SDKs and APIs to the customer’s needs.

Therefore, the sheer use-case diversity that Vegapay is able to bring to the table puts them in a distinguished position within this segment, and gives them an enormous competitive advantage.

Conclusion

Along with the tremendous success story demonstrated by the fintech industry within the broader Indian narrative, the rapidity in the adoption of credit cards has been stellar. However, despite tremendous growth, which would help it reach a market size of $325 billion by 2026, there are still deficiencies within the sector which lead to 50% of the population being credit underserved. A huge reason for this is are the operational issues faced by the major players within this market.

Embedded finance has emerged as a great solution for this woe. Due to the viability of this market, and rapid digitization, it is expected to reach $7 trillion globally by 2030. To achieve its true potential, the domestic market would need to evolve beyond legacy-tech based solutions which hamper the vendors’ efficiency.

Due to their subject mastery, Vegapay were able to comprehend this pain paint, and marshal their multifaceted capabilities into building a comprehensive solution that was capable enough of helping vendors and adapt to their needs. Thus, the expertise demonstrated by Vegapay’s founding team has been incredibly impressive.

With a strong product roadmap and highly intuitive plug-and-play solution, Vegapay is not only the most holistic product in the market, but also the most versatile to the vendor’s needs. Thus, Vegapay’s proposed set of offering give them a distinguished position within the market.