Vineet Singh was being optimistic when he thought he could sell his used car online and secure payment within 30 minutes as promised. Instead, he had to follow-up with the i-Buying platform for 10 days. Around the same time, a friend of his was defrauded off nearly Rs.20,000 while selling furniture on a prominent online marketplace.
Singh realised that while being online gave people access to huge marketplaces to buy and sell every item they could think of, there was a definite trade-off. He began to wonder: how do you trust somebody you have never met? Surely, you can productise it. After all, digital marketplaces were here to stay.
Singh, a startup veteran with more than 20 years of experience in companies like Naukri, 99acres, and MobiKwik, was an entrepreneur waiting for the right problem to arrive so that he could solve it.
This is when he started looking into escrow for online businesses. Singh reached out to his colleague Dinesh Kumar from his former workplace, 99acres and Castler was born. Castler was started to provide end-to-end modern escrow services suitable for the new era of companies that conduct their business over the internet.
Singh’s initial idea had been to build a safe transaction solution for both buyers and sellers, but the self-evident burgeoning of internet businesses led him to escrow banking.
The business was at the formulation stage for almost a year as it took time to secure banking partners; COVID lockdowns further pushed their go-to-market plan. This delay proved to be a boon as it was during this journey that Singh discovered the enterprise use-case for escrow banking.
Cut to 2022, Castler has onboarded YES Bank and 8 other banks as partners and counts Rainmatter – Zerodha’s venture capital arm – among its investors.
The modern economy demands new-age escrow services
Escrow is essentially a traditional solution with new-found applications. An escrow is a financial agreement wherein a neutral third-party intermediates between two people or businesses that have agreed to exchange value i.e. buying and selling. The intermediary takes control of money and tangible/intangible assets that are to be exchanged until the conditions of the transaction’s contract are met. This minimises risk, establishes trust, and secures funds.
The opportunity is massive for Castler, because online businesses are littered with risks and the entire gamut of traditional businesses is going digital. Castler has built customized escrow-based Plug ‘n’ Play Solutions for the following businesses-
Castler’s services span the entire process of setting up and operation of escrow accounts online, including services such as eKYC, eStamping, eAgreement signing, digital account opening, and online escrow transactions, along with real-time notifications about transaction status.
Castler’s plans to slingshot itself through targeted niches
Around 1 lakh companies in India use escrow accounts, according to industry estimates. Escrow deposits in India are upwards of USD 100Bn and the market is poised to grow to USD 260Bn by 2030.
Castler now offers escrow services across the B2B value chain. They have built a modular SaaS product which is industry and transaction use-case agnostic.
Castler Digital Escrow services are used by NBFCs, TechFin Lenders, Manufacturers, Service Providers, PropTech, Logistics, AgriTech, EdTech, Gaming, etc.
Over the last 15 months, Castler has expanded its customer base to 150+ enterprise customers and manages around Rs 1,000 crore worth of transactions every month.
The 15-month-old company has managed to do this with a 15-person team, headed by Kumar and Vineet. With another USD 1 million in seed funding secured in June 2022, the company plans to expand 10x.
Singh feels that escrow banking alone is a sizable market to build a large business with a clear path-to-profit. Having years of experience working with internet-based businesses such as InfoEdge (Naukri, 99acres, Naukri Gulf & Jeevansathi) and MobiKwik, his modus operandi is focussing on niches.
“Target one niche, solve the problems well, take a reasonable market share in that space, ensure that customers pay for what you solve for them, and then broaden your horizons,” Singh explains. With this thought process, Castler wants to build its brand and credentials and then offer a broader suite of products and services. It models itself on the likes of Zerodha, InfoEdge, IIFL, Edelweiss, amongst others.
According to Singh, the three pillars of building a fintech business are trust, security and technology. “We are small but we work like a very serious business. We think and plan like a large organisation but execute like a startup and this is imperative for the space that we operate in,” he says, adding that the company uses “banks as a guidepost on what to do and what not to do, that is why we have to say no to 80 per cent of business that comes our way”.
The company’s 2022 USD 1 million seed round was led by Zerodha’s Rainmatter. Castler previously raised a USD 500K idea-stage pre-seed round from Venture Catalysts, 9Unicorns, LetsVenture and AngelList.