Y Combinator-backed neo-banking platform Akudo to cease operations: Report
According to three sources with knowledge of the situation, the neo-banking platform Akudo, which caters to teenagers, is closing down its core UPI and card businesses. The decision was made in response to RBI policy, which forbade the use of Unified Payments Interface (UPI) in a co-branding arrangement.
“Akudo is likely to wind up its operations and shut down completely in a few weeks from now,” said one of the sources requesting anonymity. “The company has already stopped onboarding new users and intimated its PPI issuer LivQuik and infra partner M2P Fintech about the shutdown.”
Sources claim that over 70% of Akudo’s business is UPI, with cards accounting for about 25% of total revenue. “Apart from regulatory challenges, the company is also running out of money and its attempts to raise new capital didn’t materialize,” said another source.
Sajal Khanna, the other co-founder of Akudo, M2P, and LivQuik did not respond to any inquiries. If they respond, we will update the story.
Akudo is a digital bank for teenagers founded by Lavika Aggarwal, Khanna, and Jagveer Gandhi that offers debit cards that can be managed by parents. With the help of Y Combinator, JAFCO Asia, Incubate Fund India, and AET Fund, the company raised $4.2 million. The round, which was announced in September 2021, included participation from Tribe Capital, Cabra Capital, and a few other angles.
The RBI ordered PPI issuers to stop using UPI in co-branding deals. the June 2023 direction. Dreamx (Dream11), Fampay, Akudo, Muvin, and CheqUPI were forced to stop offering UPI services as a result of the action because they lacked PPI licenses.
But CheqUPI and Fampay were able to continue their operations in some way.
Teen-focused neo-banking is currently in a very incipient stage, and it will take a few years for it to reach a significant scale. Fampay is the industry leader in this area and has raised about $43 million, but it has had difficulty drawing in new investors and users. Although the company has not yet released its FY23 financial data, it only brought in Rs 3 crore and spent about Rs 50 crore in FY22. Another significant player in the field is Junio, which has so far raised about $8 million.
