MobiKwik's winning strategy!

Hey there,

Sequoia-backed MobiKwik is going public! With a fresh influx of funds, will this profitable payments company be able to outpace its cash-burning rivals?

First, here’s some quick context: Established in 2009, Mobikwik is one of India's first payments companies. It started with a focus on recharge services and then expanded into bill payments then when UPI launched, Mobikwik joined this new space too.

Having raised over $250 Mn from 123 investors, Mobikwik stands out as an unannounced unicorn that reached the valuation of over $1 billion profitably - a significant achievement given most high-growth fintech startups burn high amounts of cash.

So, what key factors set Mobikwik apart from competitors and position it for future success?

1. Early mover advantage in payments - Mobikwik was amongst the first payments-focused startups in India, founded in 2009 by executives with 15+ years of experience in global payments giants like HSBC and PayPal.

This deep expertise equips Mobikwik with valuable insights compared to relatively newer players like Google Pay (2017) and PhonePe (2015).

2. Customer loyalty over cashback incentives - Many digital payment competitors use generous but unsustainable cashback and discount offers to attract customers. But Mobikwik instead focused on building loyalty through its SuperCash rewards program, resulting in 90% of their payments being non-incentivized.

3. Strong network effects - Leveraging its first-mover advantage, Mobikwik has claimed to have built a large network of over 140 Mn users and 3.7 Mn merchant partners. This substantial scale poses barriers for newcomers and challenges for established players to match.

4. Pioneer in BNPL - Mobikwik was an early mover in offering digital credit services, launching them in 2018 before "BNPL" became a fintech buzzword. Today, lending contributes 60% of their revenue.

5. Strategic Partnerships - Mobikwik has prioritized strong partnerships from its inception. For instance, their 2015 partnership with Uber facilitated the launch of a payment gateway. In 2017, they collaborated with IDFC to launch a prepaid Visa card.

Additionally, they formed a strategic alliance with Bajaj Finserv, one of India's largest finance companies.

Mobikwik's journey sets a powerful example that fintechs don't really have to rush and burn cash to find success. Their path of steady, sustainable growth illustrates that achieving success isn't solely about the 'fail fast' approach; it's also possible to ‘succeed slowly’.

✏️ Jargon of the day

Network Effects:

Network effects occur when a product or service becomes more valuable as more people use it. For example, a social media platform becomes more interesting and useful when more of your friends join it.

Similarly, a payment app is more convenient if many merchants and consumers are using it, making transactions easier for everyone.

Loved this edition? Or have some thoughts to share? We'd love to hear from you

Cheers,
Karthik