Vegapay Secures $5.5 Million to Streamline Credit Card and Lending Processes

Vegapay, a business-to-business (B2B)-focused fintech startup, has successfully raised $5.5 million in an equity funding round led by Elevation Capital, with existing investor Eximius Ventures also participating. This follows Vegapay's first institutional funding round in 2023, which raised $1.1 million led by Eximius Ventures.

The new funds will be directed towards enhancing Vegapay's product suite, focusing on product development and regulatory compliance. A significant portion will also be allocated to hiring software developers, designers, and engineers, according to the company. "In the credit card space, there are legacy companies, but most of the banks are not liking it for obvious reasons, and therefore new-age players like us are solving the core pain for a bank to offer credit cards or any credit products," said Gaurav Mittal, cofounder and CEO of Vegapay. He added that traditional credit systems used by financial institutions often hinder innovation due to extensive third-party integrations and lengthy development cycles.

Vegapay, founded in 2022 by Mittal, Himanshu Agrawal, Puneet Sharma, and Abhinav Garg, aims to streamline these processes for financial institutions, reducing the time required from several days to just one or two. The company's platform automates solutions such as card management systems, Unified Payments Interface (UPI) on credit lines, UPI on credit cards, and standalone solutions for credit-based programs like origination systems, loan collection systems, and co-lending management systems.

Currently, Vegapay works with over six banks, including a major public sector bank with which it plans to launch a credit card next month. The company is also introducing a credit line on UPI solution with another private sector bank. Looking ahead, Vegapay plans to expand globally, targeting regions such as Southeast Asia and the Middle East. The company aims to reach an annual recurring revenue (ARR) of $2 million by December of next year and to become cash flow positive, with a goal of having over 1 million cards in force by the end of next year.

"The demand for modern credit platforms by financial institutions is accelerating at an unprecedented scale. These modern systems will form the foundation of all innovations by banks and credit providers. We see great potential in Vegapay's solutions to fill this void," said Vaas Bhaskar, principal at Elevation Capital. Similarly, Softbank-backed fintech startup Zeta has recently launched a stack to support credit line-based transactions on UPI, highlighting the growing interest and competition in this space.