When Prashanth Ranganathan stepped down as CEO of financial technology company PayU in 2023, he had a clear mission: to help Indian parents finance their children’s dreams of studying abroad. With this vision, the 45-year-old technologist launched his new company Zinc Money, a startup combining wealth technology and AI.

“Every parent, every businessman, every employee I met at levels 2 and 3 already feels like they have caused a setback to their children by keeping them in a small town. There’s a lot of ambition in these places. This is what I build for,” said Ranganathan who founded Zinc Money in 2024.

This isn’t the first time the entrepreneurship bug has bitten him. This journey began in 2006 when he joined Dinesh Katiyar, Nikhyl Singhal and Ujjwal Singh to create a voice messaging startup, SayNow. Soon, he decided to go solo and created his first independent company Truvie Security, a fraud detection platform.

Ranganathan’s former teammates at SayNow sold the company to Google, while he sold Truvie to online payments giant PayPal, taking on a leadership role in the fintech company’s software ecosystem.

“As entrepreneurs, many of us enjoy being the martyrs of our own business. The most important thing is knowing when to enter a business and when to exit,” Ranganathan said. Mint.

He started again with PaySense in 2015 after his success with the PayPal-Truvie acquisition. The third time was also a good thing, as digital payments company PayU acquired a majority stake in Ranganathan’s consumer lending startup at a whopping $185 million valuation.

Nexus Venture Partners, an early backer of PaySense, has made a significant exit in the PayU deal. Nexus had invested $2.3 million in PaySense in a seed round in early 2015 and also pumped more money into the startup in two different funding rounds in 2017 and 2018.

The venture capital firm is now betting on Ranganathan again.

Nexus is leading a $25.5 million seed round from Zinc Money, with participation from Quona Capital, EDBI, Global Ventures and Saison Capital, the company announced October 28.

This also represents one of the largest seed funding rounds in Indian startups in 2024, followed by others like Centricity, Kratos Studio and Netmagic with seed funding of $20 million each.

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The playbook

Ranganathan believes his journey involves more method than luck. Accurately assessing the value and impact of a startup idea was key.

“India has a ton of very successful fintechs, but they are often overcapitalized or overvalued. Even if they wanted to get by, they would probably struggle,” he said. Ranganathan added that while many fintech companies have built healthy businesses, they have raised massive funds at high valuations, making it difficult to exit during the current funding slowdown.

His comments follow a plunge in startup valuations that peaked during the 2021 funding boom, creating many multi-billion dollar companies. What followed was a funding winter, in which tech investors around the world reduced their exposure to high-growth companies and focused on profitable companies. Many loss-making and formerly highly valued startups have therefore struggled to raise funds since 2022.

“While they have a large war chest, they have no defensible business and it is virtually impossible for them to be acquired, leaving an IPO as the only real exit option” , he said.

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What’s on the cards

Ranganathan, who could have struck gold a third time, said Zinc Money is built at the intersection of wealth tech and AI, the two sectors that will be the honey of investors’ ears in 2024.

Sumir Verma, co-founder and managing director of investment banking firm Merisis Advisors, said Mint that within fintech, weathertech is the only segment currently enjoying significant investment interest with more transactions underway. “Innovation is mainly focused on wealth management, consumer lending is not seeing much activity,” he added. According to Verma, wealth management is benefiting from strong market tailwinds with growing wealth in India.

Consumer lending, which has been the focus area of ​​most fintech companies in India in their bid to make profits, is not a hot topic at the moment, with M&A activity in this segment remaining moderate. “When the regulatory environment is unclear, companies tend to be hesitant to take meaningful action,” he added.

As an entrepreneur, many of us enjoy being the martyrs of our own business. The most important thing is knowing when to enter a business and when to exit.

Globally, in the third quarter of 2024, venture capital firms invested $3.9 billion in generative AI startups across 206 deals, according to PitchBook. Meanwhile, wealthtech startups have become the darlings of Indian fintech investors, with companies like Niyo, Centricity and Dezerv, among others, receiving funding last year.

There is a third segment, education technology, which has seen its share of problems over the past year.

Zinc Money will help families with tailored investment and financial planning to meet the increasing costs of studying abroad. It will also help students study abroad with guidance with Ada, Zinc’s exclusive AI-powered academic advisor. The company also plans to add loan offerings to its suite of services as it moves forward.

Interestingly, Ranganathan said that while Zinc is testing its offerings, partnering with brokerages, banks and NBFCs, it ultimately wants to create all offerings in-house.

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Whether it’s a brokerage, overseas remittance services or a lending platform, Zinc has it all. It aims to become a comprehensive cross-border financial services platform for Indian families, offering a suite of solutions addressing the financial complexities of global education, Zinc said in the release.

The company has obtained RIA (Registered Investment Advisor) license approval from SEBI and in-principle approval for PSP (Payment Service Provider). In addition, the company has also applied for a brokerage license from the International Financial Services Centers Authority (IFSCA) in Gift City.

“It’s a long game. This requires significant capital. But if I want to impact the lives of a few billion people, you definitely can’t do it overnight,” Ranganathan said.

What is the endgame for Zinc Money? “…optimize service for a few million customers. Whether this is done directly through us via the venture capital highway, through a partner capable of accelerating growth, or possibly through the markets public, I am open to all three options.”

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