EarlySalary raises $10 Mn from Chiratae and Eight Roads; valuation remains flat

Consumer lending platform EarlySalary has kicked off its Series C round by raising around $10 million from existing investors. Chiratae Ventures and Eight Roads Ventures have co-led the round at a valuation similar to its previous round. 

The fresh round for the Pune-based firm that offers cash advances and short-term loans to young professionals has come after a year. It had raised Rs 8.16 crore in an extended Series B round in May last year. EarlySalary has allotted 46,834 Series C preference shares, regulatory filings show. 

The shares were issued at a price of Rs 16,014.04 per share to raise the sum. Eight Road Ventures and Chiratae have invested Rs 37.5 crore each in the five-year-old startup. Importantly, the transaction was completed in February, this year.

EarlySalary’s valuation remains flat in the Series C round. As per Fintrackr’s calculation, the valuation of the company has been estimated at around Rs 310 crore. Notably, the issue price per share has dropped by 21% to Rs 16,014.04 per share from Rs 20,285 per share in the last round hence the valuation has remained flat even after the company issued fresh stock worth Rs 75 crore.

With this infusion, Eight Roads Ventures has increased its shareholding to 29.97% while Chiratae now controls 25.54% stake in the company. EarlySalary’s co-founders Akshay Mehrotra and Ashish Goyal collective holdings have been diluted to 13.9% from 18.33% after the fresh infusion.

EarlySalary partners with small, medium and large companies to offer short-term loans for shopping, travel and education. Some notable partners include Flipkart, Amazon and MakeMyTrip.

According to the company’s website, it offers salary advances of up to Rs 2 lakh and a loan of up to Rs 5 lakh and has provided 16 lakh loans worth Rs 2,850 crore to date. It further claims to have over 5 lakh customers and 500 corporate partners. While the company has not filed annual reports for the fiscal ended in March 2020, EarlySalary recorded total earnings of Rs 15 crore at a loss of Rs 17.2 crore during FY19.

Over the past couple of years, short term loan space has become crowded with the entry of several dozen Chinese and US-based companies such as Cashbean, Gorupee, Moneed, Cashmama, Branch and Tala. However, a major chunk of companies linked to China shut their operations as the Indian government banned foreign direct investment flowing from the neighbouring country under the automatic route.

The company directly competes with Slice, ZestMoney, LoanTap, PaySense, MoneyTap, and IndiaLends among a few others. EarlySalary is one of the handfuls of companies in this space to raise money in the last 12 months. MoneyTap had raised Rs 500 crore from RTP Global, ATG and Sequoia India in January this year whereas Bengaluru-based Slice (formerly Slice Pay) closed $6 million in pre-Series B round in June.