Innovate

How An Entrepreneur And An Investor Together Created A Fintech Product For The Middle Class

Originally Published On YourStory |

In an interview with Bala Parthasarathy, Co-founder of MoneyTap, and Shripati Acharya, Co-founder and Managing Partner of Prime Venture Partners, YourStory Founder and CEO Shradha Sharma finds out how an entrepreneur and an investor bring different skillsets to the table but are ultimately able to work together to build a solid startup with a great business value.

Here is an edited excerpt of their interaction.

Shradha Sharma: Tell me your story, tell us what has been happening between both of you over the years. 

Shripati Acharya: Bala and I have known each other since the first day of college; we were in the same hostel while at IIT. After we graduated, both of us landed in the Bay Area for our grad school and then our work. We started Snapfish together as co-founders, Bala was the CEO and I was the product guy. After that, we ended up in India the same time about nine to 10 years ago and had the opportunity to work with Nandan [Nilekani] as co-volunteers in the Aadhaar project. Then we started Prime together, that time it was AngelPrime. We were co-founders there along with Sanjay Swamy and now I have the privilege to be on his board on MoneyTap as an investor.

SS: Bala, how has your relationship grown over the years?

Bala Parthasarathy: I think our wives will probably have more interesting interpretation to this question because at various points of time they have accused us both of spending more time with each other than with them! But definitely, it has been a very interesting and very rewarding journey. It’s evolved over the years, we were partners, co-founders, co-investors, and co-volunteers when we were working on UID. But we have also done other stuff together, we go on hikes together, have a lot of shared hobbies as well and now we are at yet another state of evolution where he is on my board and I have to watch what I say!

SS: What we see typically in startups is young people coming together. How have you been able to retain that magic together and how have you been able to evolve over the years in your relationships?

SA: I will say that ultimately the relationship is about two things: trust and transparency. For example, once we were in Sikkim, our tide was very random. We were at a very high point and I told Bala that I’m not feeling that great. So Bala and I decided we should go down to the previous camp, spend the night there and then come back up. Bala ensured that all systems were okay for me and then he continued on the trek later. I don’t think we can say that we won’t have different opinions, but I think that there has to be an element of belief that the argument the other person is going to come forward with is fair. I think one has to reach that level before he can move ahead.

I don’t think we can say that we won’t have different opinions, but I think that there has to be an element of belief that the argument the other person is going to come forward with is fair. I think one has to reach that level before one can move ahead.

SS: Bala, was starting MoneyTap and getting Shripati on board as an early investor and partner a conscious decision for you?

BP: As an entrepreneur, you want the highest valuation and as an investor, you want a low valuation so there is no middle ground on that one. In a situation like this, we actually had New Enterprise Associates set the valuation but we wanted Prime in, because of the specialty of AngelPrime that we have built and now continue with Prime Ventures. It focusses on some of our long-term plays. We started the company in October 2015 and launched a product in October 2016. It takes a lot of stamina to last through and an impatient investor will push you to do something that is incorrect. So, besides him [Shripati] being my friend, Prime Ventures was the right fit for us.

SS: Tell me about MoneyTap, because we believe this is going to be the next big thing from India.

BP: While we were working for Aadhaar, Shripati and I saw what technology could do to transform the landscape in five years. We want to solve the Indian problem the Indian way and not copy something from the US or China or do some jugaad. We wanted to build a real technology play and we are solving the real problem of consumer credit for middle-income consumers. They are constantly short of cash. They may even have some savings, but you can’t break it when you want to pay your school fees or go on a trek or there is a wedding or a medical emergency. Every family has some unexpected expenses and its ticket size is maybe Rs 5,000-Rs 50,000, which was not being served by any banks. Today, if you need Rs 30,000 you go to your family or friends. The unique thing is to partner with banks. Some of the banks also want to lend to them, but they don’t have the tech and the setup to do that.

We are bridging that gap; MoneyTap is an app you can download. We tell you yes or no for a credit limit, which can be anywhere from Rs 25,000-Rs 5,00,000. We’re an interest interface for the bank, but the Money Tap app controls everything. If there is a medical emergency and you want to borrow Rs 20,000 in the middle of the night, you can tap a button and the money is in the bank account in 15 seconds. Then you pay it off on EMIs to the bank, all from the app.

SS: This is solving a real problem in our country. Shripati, what excited you about this idea?

SA: The financial inclusion through fintech presents an enormous opportunity in India because we are a country of entrepreneurs. We don’t have a social security net in the country. We felt that the opportunity in driving financial inclusion to the people. At a fundamental level, it can move the needle for the country, which means it’s a huge market. At Prime, it is our belief that we have a lot of first-order problems that make sense from an investment standpoint.

MoneyTap is not just a digital channel for a bank. It is actually core-driving an innovation and providing a product that does not exist. It is not available even in the US. You have a personal line of credit tied up to a home mortgage but this is an unsecured line of credit that Bala was talking about. The product was very new and it was partnering with the banks instead of trying to replace the bank.

The advantage is a huge scale because the banks have the regulatory umbrella and the ability to provide funds. And of course, the team that is behind it is great — Bala, Anuj, and Kunal. Bala has been an entrepreneur before, but he has gone and crossed over to the dark side, being an investor and now he is back to being an entrepreneur. I know the bar that Bala sets for himself and I was very comfortable to invest.

SS: Bala, why did you choose Shripati not as your co-founder in this venture but as your investor?

BP: You should ask him.

SA: I think it requires a different kind of mindset and I felt for that ‘knowing thyself’ is the motto here. For me, the pace, that is long term, and the patient play works well because being a VC is also a hard business as ultimately you have to give returns but it plays out over a longer period of time. The pace where the action happens is very concentrated; it’s like hunting: you have to wait and all of a sudden a whole bunch of things happen. I felt that it fits my DNA and knowing Bala he likes to be in the action.

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