Fintech infrastructure company Setu has expanded its offerings and now covers payments, data, investments and lending through its automated programming interface (APIs). In August, Google Pay partnered with the company to offer fixed deposits of Equitas Small Finance Bank.
While the Lightspeed-backed startup has been scaling up at a decent pace, it seems to be in a pre-revenue stage as far as revenues go in FY21.
Setu has recorded operating revenue of Rs 3.31 crore in FY21 versus nil during FY20. This is the second full fiscal year in operations for Setu. The entire income comes from the sale of the service (subscription fee).
The Bengaluru-based firm has managed to earn Rs 5.74 crore in FY21 as other income from interest on bank deposits which is 334% more than FY20. The company had raised a $15 million (Rs 110 crore) Series A round at the beginning of FY21.
To achieve this operating revenue, Setu has spent 228% more in FY21 at Rs 27.96 crore, from Rs 8.52 crore in FY20. Following the B2B template for its vintage, close to 84% of Setu’s expenses were incurred on salaries and other employee benefit schemes. This cost jumped 254% in FY21 to Rs 23.51 crore in FY21 from Rs 6.63 crore in FY20. Importantly, Rs 10.3 crore (43.81% of emplyee benefit payments) were spent towards ESOPs in FY21.
The three-year-old company has also spent Rs 1.73 crore on consulting in FY21. This cost jumped 226% in the last fiscal versus Rs 53 lakhs in FY20. On a unit level, Setu spent Rs 8.45 to earn a rupee in operating revenue during FY21.
This spurt in overall expenses has increased setu’s cash outflow by 70% to Rs 15.3 crore in FY21 as compared to Rs 9 crore during FY20.
While the pandemic had a huge impact on collections of businesses across sectors, Setu is unlikely to have faced a severe blow as it’s a tech infra company in a sector that is clearly evolving fast and growing. To that extent, the firm’s focus will be on rolling out its products faster even as it seeks to control burn in year 4. Of course, with the right product portfolio and tech chops, the firm will always be a candidate for an acquisition by a large group or firm seeking to build a financial marketplace.
Update: The story has been updated to reflect the ESOP expense (non-cash).