Data Sutram Secures $9M to Power Fraud Detection in BFSI Sector

Data Sutram, a B2B SaaS firm with a focus on Banking, Financial Services and Insurance (BFSI), has raised $9 million (about INR 77 crore) in Series A funding, headed by Lightspeed Venture Partners and B Capital. There were both primary and secondary agreements in the round.

Rajit Bhattacharya, the founder and CEO of Data Sutram, told a media outlet that several of the original angel investors have also partially left the current fundraising effort, although he would not reveal their names.

With the new funding, the Kolkata-based business intends to improve its fraud detection system. It also seeks to serve a broader range of high-risk industries, such as insurance, e-commerce, gaming, real-time payments, cryptocurrencies, and fast commerce. The company's previous concentration was only on the banking and lending industries.

With about 65 employees now, Data Sutram also wants to increase its personnel. Bhattacharya stated, "This investment will enable us to expand our customer base, improve our product offering, and fortify our global presence in order to serve more businesses and institutions worldwide."

Growing Fraudulent Activities in BFSI Sector

The banking industry has seen an increase in fraud instances involving mule accounts. Additionally, the number of non-performing assets in NBFCs has increased to a concerning level.

In order to provide risk and fraud detection services to the nation's BFSI industry, three college friends—Bhattacharya, Ankit Das, and Aisik Paul—founded Data Sutram in 2018. The firm protects consumer onboarding and gives banking and financial institutions a "Trust Score" with its flagship product, DS Authenticate.

 Data Sutram's AI-powered tool, which is supported by data gathered from over 250 sources, alerts its clients to any fraudulent behaviour when they open accounts or disburse loans. Additionally, the startup offers a suite of products called DS Find, DS Markets, and DS Collect, which aid in client acquisition, offer superior market insights, and create opportunities for cross-selling and upselling, respectively.

According to the IIFL-backed business, its clients have seen a 45% decrease in fraud instances. Among the clients are companies such as HDFC Bank, Axis Bank, Tata Capital, and Amazon Pay.

Financial Outlook of Data Sutram

In 2023, under the direction of the Bharat Fund, Data Sutram last raised $3 million. To date, it has garnered over $15 million in fundraising, with investors including Indian Angel Network, IIFL Fintech Fund, and 100X.VC.

Financially speaking, Tofler reports that the startup's standalone operational revenue increased by about 23% to INR 5.4 Cr in the fiscal year that ended on March 31, 2024 (FY24), from INR 4.4 Cr in the prior fiscal year. Nonetheless, Data Sutram's net loss more than doubled from INR 4.75 Cr in FY23 to INR 10.83 Cr over the reviewed period.

According to Bhattacharya, the firm has successfully decreased its increasing deficit in FY25 and plans to break even within the next year. As investors rush to support AI-driven SaaS firms, SaaS startups in India raised $2.1 billion in funding last year, a 31% YoY increase, according to the "Indian Tech Startup Funding Report 2024". In addition, the SaaS industry in India is anticipated to expand quickly.