Neo-banking startups in India are yet to hit critical mass but they continue to mop up big cheques. After raising $12 million in August at a 3X premium in its valuation, Fi (formerly EpiFi) is reportedly in late-stage talks with B Capital to raise a new round.
Fi’s new round came at a time when its major competitor Jupiter already cornered $45 million from Nubank. While the interest of investors in the segment has been going strong, they are yet to gain traction and generate any meaningful revenue. Fi’s financial report card in FY21 is a testament to that.
Fi has recorded zero operating revenue in FY21, the company’s regulatory filings show. During FY20, it was operational for 10 months without operating revenue. While this is not surprising as the company appears to be chasing accounts [customers] and has no immediate plans to monetise, its losses surpassed Rs 50 crore in FY21.
Fi has made a non-operating revenue of Rs 1.27 crore in FY21.
Fi spent Rs 40 crore on salaries in FY21
Fi’s total expenses were Rs 51.55 crore out of which Rs 39.53 crore went into paying salaries and other benefits to employees. This was an almost 6.6X rise in employee benefits as compared to Rs 6.03 crore in FY20.
While the exact headcount at the Bengaluru-based company at the end of FY20 is unknown, it has over 200 employees at the moment, according to its LinkedIn profile. By that count, the cost incurred on salaries by the company seems high. However, skyrocketing salaries to developers and other functions could be reasons for such a burn.
Fi has spent Rs 3.53 crore on technical consultancy whereas advertising and information technology costs stood at Rs 2.29 and 1.82 crore, respectively in FY21. The other major cost centres were legal fees—Rs 2 crore—and Rs 70 lakh on rent.
Due to a surge in expenses, Fi’s losses ballooned 5.7X to Rs 50.28 crore in FY21 from Rs 8.77 crore in the previous fiscal of FY20.
Fi is likely to be a pre-revenue firm in FY22 as well
Fi has largely been focusing on driving growth and is yet to kick off any monetisation effort. Offerings such as lending and other financial services are going to be major revenue drivers for neo-banks such as Fi. However, none of the three major neo-bank platforms: NiyoX, Jupiter and Fi have a visible revenue model yet.
Jitendra Gupta’s Jupiter has been exploring lending with Bullet (formerly Bullet Money). It’s an app that offers a ‘buy now pay later feature’ in the UPI ecosystem. However, it’s not operational as it hit a regulatory bump and is currently waiting for NPCI approval. According to NPCI guidelines, services on the top of the UPI framework aren’t allowed to lend.
Apart from these three neo-banks, there are several venture-backed fintech companies including Khatabook and OKCredit who didn’t make money for three consecutive fiscals.
