Chit funds is quite a popular manner of investments and gaining returns over time. However, there are ample amounts of chit funds in the country, and most of them operate offline. Its where the credibility of the chit funds remains but the trust, transparency doesn’t. Furthermore, chit funds aren’t accessible to many in the country.
Potential investors in chit funds have the trouble of searching for the best one. Its where Chit Monks come into the picture who allow users to find their suitable chit fund to invest their money. The company operates through blockchain technology for accurate tracking and discrepancy. Speaking with the co-founder and CEO of Chit Monks, Pavan Adipuram, all the interview excerpts are provided below.
Give a brief info about your startup.
ChitMonks, by Pangean Global Services Pvt Ltd, is a blockchain-based chit fund management platform founded in 2016 by Pavan Adipuram, Malla Reddy and Sridhar Reddy with a singular vision of – Making investments in Chit Funds more Accessible, Credible and Rewarding. ChitMonks connects all Registered Chit Fund companies on to one platform to make their services more streamlined, efficient and inclusive.
The company’s first offering T-Chits developed for the Telangana government was a blockchain-based product that allowed the state government regulators to administer chit fund operations on a private permissioned blockchain network.
Since July 2020, ChitMonks has launched three new products for the chit fund industry – ChitFunds 2.0, ChitPe and ChitInsure.
ChitFunds 2.0, is an extension of the previous product that was designed for regulators. Along with taking care of a chit fund company’s complete digitisation needs, ChitFunds 2.0 also brings other entities such as banks and financial institutions onto the platform in order to serve the chit fund firms.
ChitPe, is an online collection platform wherein chit fund companies and customers can pay their dues and keep track of their payments in a simple and hassle-free manner using Internet Banking, Debit card and UPI through the platform.
ChitInsure, the latest launch by ChitMonks, is a first of its kind Insurance product specially designed to protect the subscribers of registered Chit Fund companies. It offers two products, one helps the companies in providing additional security for new subscriptions, while the other is specially designed to protect the future liabilities of the subscribers.
ChitMonks ecosystem stands for three things: Trust, Efficiency and Inclusion. In 2018, ChitMonks was identified as the Most Innovative Blockchain Startup by the state of Telangana. In Feb 2020, ChitMonks was awarded Gold, at National level for implementing emerging technologies such as blockchain to bring trust in the administrative process of Chit fund operations.
Inputs by Pavan Adipuram, Co-founder and CEO, ChitMonks
What made you start your startup and what problem does it solve?
During our initial research, we realised that Chit fund as an asset class has a large customer base across the country, and there are about 30,000 registered chit fund companies in India, which were doing legitimate businesses worth around Rs 40,000 crores back in 2016. Though Chit funds are the type of investment that majority of the individuals understand, we noticed that this space seemed to lack trust, structure and technology, and if improved upon, chit funds could play a significant role in financial inclusion.
We launched ChitMonks in 2016 to address these issues, with a vision of making investments in Chit Funds more Accessible, Credible and Rewarding.
We work with only Registered Chit Fund companies and help them build trust in their operations through blockchain technology and also to become 100% digital. ChitMonks connects all Registered Chit Fund companies on to one platform making their services more streamlined, efficient and inclusive.
Tell us about yourself, your previous jobs/ventures? What were you doing before this startup?
Prior to launching ChitMonks, I was working with TCS as a Project Manager, delivering innovative solutions enabling businesses for some of the best financial services companies in the US. My 18 years of experience in IT Project management and product development has helped shape my business understanding and knowledge on the payment systems in India ranging from solutions of payment gateways to financial transaction systems. In 2016, my co-founders and I started ChitMonks that uses blockchain technology to develop solutions for the chit fund industry which allows for higher transparency and better efficiency.
Malla Reddy, co-founder, and CTO of ChitMonks comes with over 18 years of IT experience in the Telecom sector and over the years worked with brands such as HCL, Motorola, Nokia, and Qualcomm. Malla Reddy has in-depth knowledge in programming languages, middleware applications and BPM tools. Sridhar Reddy, co-founder, and CIO of ChitMonks comes with over 18 years of work experience across Information Security management, EMS, and process management over the BFSI spectrum. Sridhar looks after all facets of IT services and functions of the business, and next-generation product development at ChitMonks.
Where is your startup based out of? Why do you think that is the best place for you?
ChitMonks is a Hyderabad based startup. My co-founders and I are based here and we believe the City has much to offer with a strong startup ecosystem that houses a number of incubators and accelerators along with a robust talent supply. Chit funds are a good savings instrument and quite popular especially in South India. Hyderabad being the startup hub of Telangana, the state government here is also quite proactive in exploring new technologies and solutions to encourage startups. Our regtech product is a success only because we could get our first client as the Telangana Government.
As a startup founder, what are you paranoid about? What keeps you awake at night?
I have always wondered why ChitFund companies are not able to use the latest technology to power their business. We as a society and financial services industry have come a long way from conducting introductions to open a Banking account to disbursing personal loans without even meeting physically once. All this is possible thanks to banks adopting technology.
Even today, many chit fund companies are still conducting a lot of overarching steps to disburse money which the customers very well deserve. Technology usage is almost zero at this juncture. How are these companies planning to expand beyond a scale? Even at scale, there are companies who still conduct the same old processes. You would be surprised to know that the best chit fund companies didn’t even have a customer facing app until we came into the market. Till date, the customer experience we have brought in this business is still not achieved even by the best.
Whatever could be their reason, there is a huge scope for technology adoption in this space. The idea of making them excited on how they can grow their business, how they can actually become more efficient and how we can help them to do that both effortlessly and cost effectively is something that keeps me awake at night.
Chit Funds play an important role in financial inclusion if encouraged to perform under a well guided supervision, which again technology can provide. That is something which I can’t get out of my mind when thinking about why it is not so obvious?
Who are your competitors and how are you better than them?
Chit funds are one of oldest and still relevant financial instruments for the low and middle income bracket. As per our research, there are about 30,000 registered chit fund companies in India, which are operating registered chit fund businesses with approximately 1,50,000 crore AUM (Asset Under Management).
When we started out in 2016, ChitMonks was the only marketplace for chit funds in India, that connected all chit fund stakeholders on an AI powered platform and enabled them to manage their groups.
The chit fund industry in India has been under a shadow of doubt, but the challenges go beyond that. The industry needs to bring in more awareness, digitalisation, trust and transparency in the administrative process of Chit fund operations, to protect subscribers from unregistered business and potential fraud. Our product T-Chits addresses this issue using Blockchain technology. We are the only ones in India who have successfully used some emerging technologies like Blockchain to solve some of the pressing issues in the Governance of Chit Funds in the state.
We pivoted our marketplace model to a completely Tech enabled Platform targeting only B2B customers. Meaning we are now working closely with the registered Chit Fund companies to bring them onto a largest network of Savers and Borrowers. Using our platform the companies can target new age players and attract them to this age old financial instrument with the accessibility of new generation tech.
While there are companies who are in the business of providing software to Chit Fund companies, many of them are either completely offline (which means they are stuck to one PC), or others who are just doing basic accounting systems. On the other hand, we have an end to end solution of bringing the entire customer journey to the digital world and continue the experience further up for customer delight. Apart from customer delight, we are also making the Chit fund companies operationally more efficient and technologically advanced to deal with any future financial services as well.
ChitMonks is 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 platforms. We are the technological partners for All India Association of Chit Funds, and are also working with the Telangana govt. to help them regulate Chit Funds in the State.
At ChitMonks, we continue to add new products with disruptive features to help all the stakeholders run the ship on the right course, making Chit fund investments trustworthy and transparent for regulators and subscribers.
How hard is it to have a work-life balance as a startup founder and how do you manage it?
Startup journey is not a 9-6 job for sure. Many of us burn continuously in the paranoia it creates specially when it comes to starting days of the execution. We believe the journey to be tough until we achieve a milestone. However, every milestone sets course for another milestone which burns you out eventually. Being aware of this fact and taking some power breaks in between has always kept us in a good place. But I must acknowledge that it is a continuous effort to keep a work-life balance.
Have you raised funding? If yes, then we would like to know the details. If no then please tell us if you are looking to raise.
In July 2020 ChitMonks raised $650,000 in a pre-Series A funding round from Unicorn India Ventures.
What’s the biggest misconception people have about you? Why do they have that? What’s the reality?
The one I have heard so far is, I look at multiple directions while executing a task. I believe that success is not achieved by how well you execute plan A but how well you cope with plan B if needed. We are not in the business of trying out something and leaving it midway if it doesn’t work out.
The window to reality is if one has given up their comfortable jobs to chase their wild dreams with 95% certainty that it might fail (Startups), then one has to be much more careful in execution. Running a company is a bigger responsibility. So, for me, I think we should always have plans in place to make this work for us, our customers, our investors and our employees as well.
What gets you excited about this company?
The Impact we can create at scale when we grow in size and shape, really gives me a kick. Imagining the company growing to become a sustainable business with a growth rate which is driven by the partners and ecosystem, is a bigger dream which makes me continue the journey no matter how hard it is.
Tell us how a day in your life looks like? Your schedule for a day right from the time you get up till you hit the bed at night.
There are all kinds of days in my diary. I try to have a routine and start my day with some physical activity such as yoga or a morning walk. I catch up with my messages and business related emails before I get ready to leave for work. Typically, my day is choc a bloc with meetings and planning sessions. I like to space out my meetings with small catch up breaks where my co-founders and I do brainstorming around product life cycle, investment meetings, sales strategy, and at times even catch up on informal matters. I typically have one coffee break post lunch where I prefer to unwind on things beyond business.
I wind up pretty much everything so that I can spend some quality time with my kids when I reach home. As far as possible, I don’t miss having dinner with my family where we catch up on all things from school updates to global news. I’m not an avid reader but will finish what I start. I try to end my day by 11PM only to start a new day by 6AM next morning.
Tell us about your team and how did you meet each other?
The company’s founding team started out with 4 members and were brought back to 3 after our first fund raise. We met in 1998 during our Engineering course. It was the will to do something on our own and create an impact in this world which drove all of us together. We as a team had all we needed to start a company from idea, determination, experiences in Tech, Sales, BD to funds. Slowly we evolved our product/market fit based on our strengths and continue to play it still.