YAP, a fintech infrastructure provider, has raised $10 million to support its expansion from its native India into Asia and the Middle East.
“We have the foundation to build a large company,” said Madhusudanan R., one of three co-founders of the Chennai, India-based fintech. “We want to focus on a large outcome over the next decade. The money we’ve raised is to fuel new engines of growth.”
Flourish Ventures and Omidyar Network India led the Series B round. The financing follows a smaller Series A raise from late 2019. YAP’s existing investors – Beenext, 8i Ventures and Better Capital – also participated in this latest funding.
For the venture capital firms, the attraction of YAP is its role in embedded finance – placing financial services seamlessly within consumers’ digital lifestyle activities.
Anuradha Ramachandran, investments director at Flourish Ventures, says YAP is at the intersection of embedded finance. “It’s a platform where different parties will transact and overcome trust-related issues,” she said. “Embedded finance requires infrastructure.”
Amol Warange, director at Omidyar Network India, seconded that, noting that YAP is providing the plumbing that makes embedded finance possible. “Companies that want to provide customized financial solutions on the go, in a compliant manner, need the kind of infrastructure that YAP provides.”
YAP began as a payments fintech six years ago. India, with its government-led India Stack of foundational digital services, created the opportunity for the company to serve the emerging ecosystem more like a marketplace.
Every company wants to become a fintech
Madhu R., YAP
On the one side are banks or other licensed financial institutions, which need to adopt fintech-level customer experiences. On the other are fintechs who need to plug into banks, or merchants or other third parties with customers that are looking to add a financial service to their business.
YAP’s revenues reflect its payments background. It derives fee income from interchanges (whenever a customer uses a merchant’s credit or debit account to buy something from them). It also has a growing business in providing APIs to banks or merchants, which it operates on a subscription basis.
Third, the company is looking to develop products based on its growing network of partners and affiliated data; proceeds from the latest fundraise will support this effort.
The most exciting aspect of the financing is to help YAP expand outside of India. It already has operations in Nepal and Bangladesh, and customers in the Philippines, Australia and New Zealand, says Madhusudanan. The firm is looking to grow a team in the Middle East, and expand into Southeast Asia.
“We want to be a pan-Asia business, with twelve to fifteen markets,” Madhusudanan told DigFin. This isn’t easy because it takes time to sign contracts with banks, and local markets don’t have the same infrastructure as India. But he believes where participants are looking to pursue embedded-finance models, YAP has a chance to win new business.
“Every company wants to become a fintech,” he said.
