B2B fintech Vegapay raises $5.5 mn; co. to fund team expansion, operations

Vegapay, a business-to-business (B2B) fintech firm, has raised $5.5 million in a seed round that saw the participation of Elevation Capital and Eximius Ventures.

The company will utilise the capital raised towards expanding product and technology teams and investing in operations and compliance requirements.

“The idea is to add a few more engineering and tech folks immediately and then keep adding as and when required. We will spend the money on team development, operations, and regulatory requirements that are needed, given we have banking products,” said Gaurav Mittal, chief executive officer (CEO), Vegapay, in an interaction with Business Standard.

In 2023, the company raised $1.1 million in a pre-seed funding round led by Eximius Ventures with participation from DS P HMK, Capri Global, Upsparks Capital, MGA Ventures, and Climber Capital.

The company offers digital lending and credit card management solutions to financial institutions such as banks, non-banking financial companies (NBFCs), and fintechs.

It automates solutions such as card management systems, UPI on credit lines, UPI on credit cards, standalone modules for credit-based programmes such as origination systems, loan collection systems, and co-lending management systems.

Essentially, the company operates as a technology service provider (TSP) to financial institutions.

The TSP space in the larger fintech ecosystem is attracting interest from investors.

“TSP as a focus area is going to be fairly significant. Once a TSP works in India, it is very believable that the same can be taken global. So, even if I look at the investments we have done last year, I think there is a good mix of both TSPs and other models,” said Vaas Bhaskar, Principal, Elevation Capital.

On their investment in Vegapay, Bhaskar added, “Financial institutions' demand for modern credit platforms is accelerating at an unprecedented scale - driven by customers seeking best-in-class experiences and products, numerous embedded credit partnerships, and new form factors like Credit on UPI and compliance requirements. These modern systems will form the foundation of all innovations by banks and credit providers.