Gig workers-focused neo-banking platform Yelo has shut down operations as the company didn’t find product-market fit and manage to raise a follow-on round, said two people aware of the details. This is the first major debacle of the neobank space which amassed significant funding in the past two years.
“Yelo suspended the operations last month and laid off all employees in the past few months,” said one of the sources requesting anonymity. The shutdown could also be observed from its website which throws an error when one attempts to log in.
According to sources, the company had struggled to figure out a business model and the pandemic had caused severe damage to its plan. Yelo used to provide savings banking facilities, remittance and micro-credit solutions to workers in the blue-collar segment with a monthly income of less than Rs 30,000.
Founded by Nilesh Agarwal and Abhishek Challa, Yelo had raised an undisclosed amount in its maiden round led by Matrix Partners. Omidyar Network India, Flourish VC and Better Capital also participated in its funding round in Sep 2019.
During the last fundraise, the company had said that the segment they are targeting is around 8-10-crore strong and works for small corporate entities or with aggregators like food-delivery platforms, taxi services and others.
Queries sent to Yelo, Matrix and Omidyar didn’t elicit any immediate response. We will update the story as and when they respond.
According to Sensor Tower data, Yelo has garnered over 4 million downloads on its app. However, the app has received almost negligible downloads since April 2020.
While Yelo was early to test a neo-banking solution for the blue-collar segment, Gurugram-based Bueno and Kosh are two notable players in the sector. Bueno had raised $3 million in its seed round from Goat Capital, JAM Fund, Olive Tree Capital, Good Water Capital and others whereas Kosh got backing from Y Combinator.
New York-based Lili is a notable neo-banking platform globally that focuses on gig economy and freelancers. It had raised over $80 million from the likes of Target Global AltaIR, Primary Venture Partners and Torch Capital.
In India, Open Bank and Razorpay X are the biggest neo banking platforms meant for businesses while Jupiter, Niyo, P10 and InstantPay are top players in the consumer-facing new age banking solutions.
Bengaluru-based Open had raised its last funding of $30 million in June 2019 led by Tiger Global whereas Razorpay scooped up a $160 million round at over $3 billion valuation in April this year. According to a TechCrunch report, Open is also in talks to raise a $100 million round at a $600 million valuation.
Recently, epiFi had kicked off its new round with $12 million from its existing investors at a 3X premium in valuation from its seed round 18 months ago.