Crypto startup ChitMonks has raised $650k in a pre-series A round with the help of early-stage investors Unicorn India Ventures (UIV).
The firm aims to revolutionize proceedings by bringing 21st-century blockchain technology to the old-fashion chit-fund market.
“At ChitMonks, we are building India’s largest blockchain network for Savings and Borrowings. We synergize Chit Fund Companies, Regulators, Subscribers, Banks, Service providers, EcoSystem enablers to drive the largest trusted network of Savers and Borrowers platform.”
Records of Chit-funds go back to the 19th century. They are a type of rotating savings and borrowing facility practiced in India, where members make monthly contributions to build a pot.
An open auction determines the lowest bid a member is willing to take that month. The winning bidder receives their bid amount from the pot.
The remaining pot balance is then redistributed equally among the other members, minus an organizer’s fee. All members contribute again for the next month.
Chit-funds often exist as an informal arrangement between friends and neighbors. A regulatory body does not insure member’s funds, and risks, such as winning bidders defaulting on the next payment, or improper record-keeping, present challenges to the operation of chit-funds.
With that, Co-founder and CEO of ChitMonks, Pavan Adipuram, thinks that his firm can reinvent the chit-fund market through the use of crypto technology.
“We believed that such technologies can redefine chit funds and they can re-emerge as a bonafide sector where retail investors can invest and borrow money in a trustless manner.”
Modernization Through Crypto Technology
ChitMonks has developed a crypto powered platform that allows regulators to administer chit fund operations on a blockchain network.
The firm works with chit fund companies to make their services more efficient, and with the use of immutable crypto technology, much more trustworthy compared to traditional paper records.
As part of their expansion, ChitMonks is rolling out its program to chit fund companies of all sizes and across the whole of India.
They hope that the advantages they offer, including process efficiency in collections and auctions, as well as improved underwriting capability, for example, in respect of credit checks and financial records, will modernize the entire chit-fund space.
On that note, Bhaskar Majumdar, Managing Partner at UIV, sees a real need to revamping the chit fund sector. He believes, by doing so, the users of chit-fund services stand to benefit immensely.
“Even before the current COVID-19 scenario, we saw the potential in ChitMonks to revolutionize the current antiquated system of the chit fund industry by bringing the whole ecosystem online. It is in-line with our philosophy of investing in businesses that can digitize current processes and make them more transparent and accessible.”
UIV’s shared vision and confidence in the platform will allow ChipMonks to develop India’s largest blockchain network for savers and borrowers.