Axio secures $20m funding to boost fintech sector

• Axio is positioned to enhance customer experience further and tailor its credit products to diverse consumer segments
• Cofounders say the investment would facilitate scaling their loan book while ensuring robust risk control measures.

The Indian fintech space has undergone a remarkable transformation in recent years, innovating traditional banking practices and pioneering new financial services tailored to diverse consumer needs.

Among its rising stars is Bengaluru-based digital lender Axio (formerly known as Capital Float), which has recently secured an infusion of $20 million (approximately ₹167.8 crore) from the Amazon Smbhav Venture Fund.

The strategic funding is not merely a financial booster for Axio; it represents a significant endorsement of its business model and long-term vision.

Background and evolution

Founded in 2013 by entrepreneurial visionaries Gaurav Hinduja and Sashank Rishyasringa, Axio has evolved from a nascent startup into a substantial player in the digital consumer finance sector.

Initially registered as CapFloat Financial Services Private Limited, a non-banking finance company (NBFC) with the Reserve Bank of India (RBI), Axio has channeled its efforts towards democratiaing access to credit for millions of underserved consumers in the Indian market.

The company’s ethos centres on flexibility and convenience, epitomised by its offerings, which include ‘pay later’ solutions, personal credit, and tools for financial management.

Axio has made remarkable strides since its inception, reportedly achieving an annualised disbursement of $1 billion while maintaining a low non-performing assets (NPA) ratio of 2-3 per cent. Such metrics not only underline Axio’s operational efficiency but also signify the firm’s commitment to responsible lending practices.

Recent funding round

The recent funding round involves a significant issuance of 1,125,000 preference shares priced at ₹1,486 each, intended to augment Axio’s operational capacity and product offerings.

While the firm opted not to disclose all investor identities, it is noteworthy that Amazon’s reinforcement of its stake—already at approximately 8 per cent prior to this venture—emphasises a deeper collaboration, which could indicate strategic synergy aimed at innovating alongside the e-commerce titan.

With plans to scale operations and expand their checkout finance solutions, Axio is positioned to enhance customer experience further and tailor its credit products to diverse consumer segments. Cofounders Hinduja and Rishyasringa highlighted the importance of this fresh capital, asserting that the investment would facilitate scaling their loan book while ensuring robust risk control measures.

As Axio moves forward, it’s crucial to analyze its financial trajectory. In the fiscal year ending March 2023, Axio reported a doubling of revenue to ₹220 crore, up from ₹110 crore the previous year. Although the firm faced a modest increase in net losses to ₹137 crore, this can be contextualized within the rapid expansion phase that many fintech enterprises undergo.

The infusion of capital will likely enable Axio to invest in technology and personnel, ultimately driving profitability as market penetration deepens.

Indian fintech growth

The timing of this funding aligns almost perfectly with the broader patterns observed within the Indian fintech ecosystem, which is anticipated to swell to $2.1 trillion by 2030.

India’s demographic landscape is characterised by a youthful, tech-savvy population eager for non-traditional banking solutions. Axio’s mission to innovate financial products aligns with the evolving consumer expectations, which emphasize speed, convenience, and personalised services.

The implications of Axio’s investment are profound when considering the vast pool of potential customers in India—estimated to be 200 million consumers who are yet to be integrated into the formal credit system.

By harnessing advanced data analytics and machine learning algorithms, Axio aims to unlock access to credit for these underserved populations. This aligns with the Indian government’s broader push to enhance financial inclusion and promote economic empowerment across its demographic spectrum.