Kunal Shah-Backed Fintech Startup Niro Shuts Down Citing Regulatory Roadblocks and Funding Challenges

After 4.5 years of operation, the fintech startup Niro, which assisted consumer internet platforms in offering embedded credit products, has closed. Investors like Elevar Equity, GMO Venture Partners, Rebright Partners, Mitsui Sumitomo Insurance VC, Innoven Capital, Alteria Capital, and CRED founder Kunal Shah supported the Bengaluru-based company, which was established in 2021 by Aditya Kumar and Sankalp Mathur.

In a LinkedIn post announcing the shutdown, Kumar stated that after 4.5 years, $20 million in finance, $200 million in loan disbursements, and 30 collaborations, “we’ve had to shut down Niro.”

What is the Core Reasons for Niro’s Clossure?

Just as the company was changing its business model, Shah explained, it was struck by “a perfect storm of regulatory pushback on personal lending, credit deterioration, and sub-optimal capitalisation,” which led to its demise. By collaborating with banks and NBFCs, Niro’s primary offering was to assist online platforms in integrating credit products; in other words, it transformed big consumer apps into fintech distribution channels.

The business expanded quickly and was one of the first in this field. According to Kumar, Niro had accomplished the seemingly impossible by recruiting amazing people, raising patient, high-quality funding, and persuading major consumer internet platforms and top lenders to collaborate with us in order to unleash value at scale.

Within just over two years of its start, Niro had $100 million in assets under management, and at its height, its platform had over 170 million members. During its existence, it also signed 30 partnerships and disbursed $200 million in loans. However, the company was compelled to alter its strategy at an unfavourable moment due to the swift legislative changes in the digital lending environment, declining credit quality, and financial limitations. Kumar described the situation as “a perfect storm.”

Financial Dynamics of Niro

Tracxn, a market intelligence platform, reports that Niro raised $18.7 million in four investment rounds, valued at $58.4 million. It had about 290 employees at its height. With ten years of experience, Kumar is a fintech entrepreneur who founded Qbera, a digital lending company that InCred later purchased. He oversaw InCred’s consumer loan division after the acquisition.

The closure of Niro coincides with a number of fintech startups dealing with increasingly stringent laws, declining credit scores, and a more conservative investment climate, all of which have made it harder to scale lending operations.