Exclusive: Gold loan startup Yellow Metal raises $3 Mn

Gold loan startup Yellow Metal has raised Rs 24.83 crore or a little over $3 million in a Seed I round led by MSA Capital. With this, the Bengaluru-based company has marked its first funding round in 2022.

The board at Yellow Metal has passed a special resolution to issue 1 equity share and 3,662 Seed I compulsory convertible preference shares (CCPS) at an issue price of Rs 67,773 per share to raise Rs 24.83 crore or $3.02 million, as per regulatory filings with the Registrar of Companies (RoC).

MSA Capital led the financing round with Rs 9.92 crore followed by WaterBridge Ventures and Spiral Ventures which infused Rs 7.20 crore and Rs 6.20 crore respectively. LetsVenture via LV Angel Fund and Java Capital via Csquare Venture Partners Fund also joined the round and invested Rs 80 lakh and Rs 70 lakh respectively.

In November, the company also passed a special resolution to create an employee stock option pool (ESOP) under the employee stock option scheme 2022 with 1,465 stock options convertible into the same number of equity shares. According to Fintrackr’s analysis, their ESOP pool is worth around Rs 10 crore.

As per Fintrackr’s estimates, the company has been valued at around Rs 125 crore or $15 million (post-money). The company has raised around $3.53 million to date including its Seed round of $514K in October 2021.

Founded in 2020 by Rahul and Nikhil Boggaram, Yellow Metal enables rural India with a simple gold loan in 30 minutes at their doorstep at zero processing fees and an interest rate ranging from 0.79% to 1.75% per month.

Following the allotment, MSA Capital, WaterBridge Ventures and Spiral Ventures hold 7.99%, 12.45%, and 5% stake respectively. The complete shareholding pattern can be seen below:

Yellow Metal remained a pre-revenue stage company till FY21, but posted a total income of Rs 6.34 lakh including Rs 1.6 lakh operating revenue in FY22. As per annual financial statements with the RoC, the startup recorded a loss of Rs 62.8 lakh during FY22.

The two-year-old platform competes with the likes of Indiagold, Rupeek, and Ruptok.

Recently, Indiagold closed its $22 million round whereas Rupeek is in late-stage talks to raise $50 million from existing backers. According to a report, the gold loan market in India is forecasted to reach around $77.5 billion by 2025 with a compound annual growth rate (CAGR) of ~12.75% during the 2020-2025 period.