Deal focus: Jai Kisan taps India rural resurgence

Arjun Ahluwalia and Adriel Maniego spent eight months running a store that sold goods to farmers as they mapped out plans for a business that would meet the credit needs of rural India, home to about two-thirds of the country’s population. Jai Kisan, which offers a combination of supply chain finance and buy now, pay later (BNPL) services, was the product of their endeavours.

Four years on, the start-up has received over USD 80m, including a USD 50m Series B – comprising equity and debt – from a string of investors such as DG Daiwa Ventures, Blume Ventures, Arkam Ventures, GMO Venture Partners, and Mirae Asset Venture Investment, among others.

Recalling those days running the store, Ahluwalia said the gap in the market was obvious. Farmers and their suppliers recognised the transformational effect technology could have on livelihoods, but relatively few financial technology start-ups were focused on this space.

“Everyone was interested or building for the urban poor or MSMEs [micro, small and medium-sized enterprises] or the consumer durables gold rush. That’s what ZestMoney, Slice, KrazyBee, and Capital Float were doing. There was so much competition,” he said.

“If one of the urban poor, someone without any digital footprint, walked into a store and bought a cell phone, more than 10 lenders would be waiting for them. If a farmer wanted to buy an input that would generate significant income, no one would fund them apart from the seller of that input.”

Jai Kisan operates through 25,000 small-scale suppliers that conduct over USD 1bn in business with around 5m rural entrepreneurs (manufacturing is more widely represented on the platform than farming). Disbursements amount to USD 180m on an annualised basis, and the company is aiming for a threefold increase for the year in full.

Ahluwalia describes the initial strategy as stick rather than carrot. Rather than spend on marketing to attract users, Jai Kisan established partnerships with corporates like agrichemicals giant Syngenta and started lending to select suppliers on the condition that they use Bharat Kata, its supply chain finance tool. The flywheel effect kicked in, and the company expanded horizontally and vertically.

Vertical expansion comes through BNPL and the extension of credit to customers of those suppliers. Jai Kisan claims to underwrite transactions in less than a minute, put together a loan agreement for the product journey, and the customer leaves the store with their desired product, having settled payment with the supplier, within 10 minutes.

However, BNPL is only activated once Jai Kisan has accumulated enough data on individual customers through transactions logged by suppliers on Bharat Kata.

According to Ahluwalia, the agriculture B2B marketplaces across India that are now pushing into financial services are partners of Jai Kisan rather than competitors. “About 90% of them use Jai Kisan,” he said. “They offer our BNPL product to customers and then many have relationships with suppliers, so we work with them like we do with Syngenta, providing supply chain finance.”

Jai Kisan has no ambitions to expand in the other direction, from financier to marketplace. The immediate goal is to build out the financial services offering, with insurance set to launch later this year and savings products after that. The company will facilitate access to products offered by third parties, rather than serve as a direct provider, receiving fees on each transaction.

On the credit side, Jai Kisan works with banks and non-banking finance companies (NBFCs), either sourcing capital that it lends out directly or enabling a lending relationship between customers and those counterparties. Some partners come in as equity investors as well. Jai Kisan is backed by NBFCs, families with interests in agribusiness, and corporates, including Syngenta.

“In the past five years, we’ve seen two waves of COVID, lockdowns, and a mini-financial crisis arising from the failure of a bank and the failure of an NBFC. Throughout this we have scaled, keeping delinquencies below 1% of disbursals – but we have scaled in a sustainable manner, it’s been 3-4x year-on-year rather than 10-15x,” said Ahluwalia.

One bottleneck has been human capital, with leading product managers, engineers, and business development managers preferring to work for urban-facing credit platforms. However, that too has begun to change. “Building for the Bharat has become cool again,” he added. “We’ve been trying to build awareness – of the capital in this market, the profitability, and the problems to solve.”

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• Topics
• South Asia
• Early-stage
• Financials
• Technology
• India
• Fintech
• Blume Ventures
• Arkam Ventures
• Daiwa Securities Group
• GMO Ventures