Yenmo offering loans against mutual funds investments raises $500K led by US-based YC

Fintech platform Yenmo has raised $500,000 in a seed funding round led by Y Combinator, a renowned US-based startup accelerator. The startup offers instant loans against mutual funds, aiming to revolutionize how Indian consumers access funds without liquidating their investments.

Allowing users to borrow against investments 

Ashutosh Purohit and Aryan Agarwal, Yenmo allows users to borrow against their mutual fund investments at a competitive flat interest rate of 10.5%. The platform enables investors to view all their investments in real time, choose the assets they wish to borrow against and receive the loan amount directly into their bank accounts.

Interestingly, It does not require a credit score check for loan approval, relying instead on the user's mutual fund investments as collateral.

Differentiating from others 

Unlike other platforms, the fintech startup aims to democratize access to lending options that were previously available only to high-net-worth individuals. Yenmo's approach allows users to pay only the interest during the loan's tenure, with the flexibility to repay the principal amount as they choose. 

Notably, This model not only helps keep the investments intact but also supports the long-term growth of the user's funds.

"With Yenmo, they will no longer have to sell their mutual funds. Instead, taking a loan on it is a much better way to keep the investments intact, which will help your money grow in the long term while providing access to funds for immediate requirements," said Ashutosh Purohit, Co-founder and CEO of Yenmo.

Expanding lending options to stocks

With this round of funding, The startup plans to expand its lending options to include stocks, insurance, digital gold, and land. 

The expansion is part of its broader goal to introduce a suite of lending products that cater to the diverse needs of Indian consumers, ensuring that more people can leverage their investments for immediate financial needs without sacrificing their long-term growth.

CEO highlights retail investors' issue 

Ashutosh Purohit, CEO and co-founder of Yenmo highlighted the issue of retail investors redeeming approximately $30 billion from equity mutual funds annually to meet short-term financial needs. Yenmo's solution addresses this problem by offering a smarter alternative to liquidation.

"With Yenmo, they will no longer have to sell their mutual funds; instead, taking a loan against them is a much better way to keep the investments intact. This approach will help your money grow in the long term while providing access to funds for immediate requirements," AshutoshPurohit explained.