Fintech start-up FamPay, which offers payments and financial services to teenagers, has raised $38 million in a Series A funding round, led by Elevation Capital and participation from existing investor Sequoia Capital India.

Other early investors such as Venture Highway, Y Combinator, Global Founders Capital as well as new investors General Catalyst, Rocketship VC and Greenoaks Capital also participated in the fundraising.

The FamPay funding marks one of the largest Series A rounds in India’s startup ecosystem, with only Ola Electric ($58 million in 2019) and Mensa Brands ($50 million in May 2021) having received bigger cheques in their respective Series A rounds, according to data sourced from Venture Intelligence.

The deal values FamPay at $150-$170 million, according to sources. The fintech company was on the verge of closing a smaller $25 million round in March, but interest from several investors led to the size and valuation jump, sources said. Founded in 2019 by Indian Institute of Technology (IIT)-Roorkee graduates Kush Taneja and Sambhav Jain, FamPay offers digital wallet, commerce as well as financial services to kids with specialised parental controls as well as transaction limits.

The firm claims to have two million registered users. “With around 4o percent of the Indian population being below 18, every year millions of new teenagers will start using their first smartphone and FamPay envisions becoming their go-to brand,” Jain said. The funds will be used to increase hiring across operations. The firm is using a mix of influencer marketing through social media, as well as brand outreach through its mini commerce store, as ways to onboard customers and increase engagements, Jain said.

Earlier this year, the company also launched one of the first ‘number-less’ prepaid cards for customers in a tie-up with IDFC First Bank. “FamPay is creating a market segment that a lot of brands don't focus on today. With the rapid growth, we saw our users loving the product simply because we gave them something they did not have before,” Taneja said.

In March 2020, the company said it raised $4.7 million in seed funding from Y Combinator, Venture Highway, Sequoia Capital India, and Global Founders Capital, as well as angel investors, including Twitch co-founder Kevin Lin, Robinhood co-founder Vladimir Tenev, Cred founder Kunal Shah and Pine Labs CEO Amrish Rau.

“India today has a sizable population of 250 million adolescents and we believe that catering to this unserved audience with innovative products contextualised to their needs and behaviours will create a very valuable business,” said Mridul Arora, partner, Elevation Capital. According to Shailendra Singh, Managing Director, Sequoia Capital (India) Singapore, the venture capital firm is looking at fintech as a long-term bet in India.

“Sequoia India first interacted with the FamPay team during their seed round and decided to invest right away. The team is excited to double down in this round and is looking forward to working with them to help build FamPay over the next many years,” Singh added.