Articles

Founded by Harshvardhan Lunia and Mukul Sachan in 2014, the startup will use the funds to expand lending base, build technology and strengthen analytics capabilities

Fintech startup Lendingkart on Friday announced it has raised a fresh equity round of Rs 212 crore ($30 million) led by existing investors including Fullerton Financial Holdings Pte Ltd ("FFH"), Bertelsmann India Investments and India Quotient.

With this funding round, the total equity raised by Lendingkart stands at $143 million. The startup will use the funding to expand lending bases, deepen Lendingkart Group's reach to small and underserved micro enterprises and further strengthen its technological and analytics capabilities.

Harshvardhan Lunia, Co-Founder & Managing Director of Lendingkart Technologies, said,

"We are pleased with the momentum in our business and this equity will help us meet the growth opportunities we are seeing. Micro and small businesses represent a vibrant yet underserved segment of the Indian economy. The support of all of our customers, investors and employees is empowering us to build the leading financial services platform for this segment."

In June 2019, Alteria Capital infused Rs 80 crore debt capital in the startup.

Since its inception, Lendingkart Finance (the NBFC arm of Lendingkart Group) has evaluated nearly half a million applications, disbursing 60,000+ loans to more than 55,000 MSMEs in 1300+ cities across all 29 states and union territories of the nation.

Commenting on the investment, Yeo Hong Ping, President, Fullerton Financial Holdings said,

"Over the past year, Lendingkart's business has seen robust growth and continues to exhibit great potential. We are delighted to continue partnering with Lendingkart who has been at the forefront of making working capital digitally accessible for MSMEs, as India continues its journey towards becoming a digitally enabled country."

Lendingkart Finance works towards ensuring availability of credit for small and micro enterprises across the country that either do not have access to credit or are capital deficient currently. The company said it leverages robust in-house technology tools based on big data analytics and machine learning algorithms to evaluate creditworthiness. By analysing thousands of data points to assess factors like financial health, comparative market performance, social reliability and compliance and a distinctive evaluation process, Lendingkart aims to disburse loans with minimal paperwork within 72 hours.

Pankaj Makkar, Managing Director, Bertelsmann India Investments said,

"Digital lending is revolutionising access to capital for MSMEs. With focused efforts of the Government and technological advances such as big data, digital lending has set the stage for disruption with greater formalisation, faster capital disbursements and vastly improved customer experience. We are proud to be a part of this incredible journey with Lendingkart as it continues to demonstrate market leadership in this space."

Lendingkart is currently present in Ahmedabad, Bangalore, Mumbai, Delhi NCR and Kolkata but have a service reach across India. The company's consolidated revenue grew to Rs 91.8 crore last fiscal from Rs 35.6 crore in FY17.

It competes with the likes of Capital Float, NeoGrowth, and India Lends among others.

Expanding reach with 1000 cities, how does Lendingkart stack up in numbers?

On Tuesday, NBFC Lendingkart Finance Ltd. stated that it has expanded its reach and facilitated loans to 1,000 cities in India, disbursing more than 25,000 loans across 26 diverse sectors.

In a statement, the company said that it has received requests from more than 650,000 MSMEs till date and has evaluated over 150,000 requests to validate the creditworthiness of applicants.

Speaking on the milestone, Harshvardhan Lunia, CEO and Cofounder, Lendingkart Technologies, added,

"When we started Lendingkart, we wanted to ensure that we reach every nook and corner of the country. And disbursing loans to applicants across 1000 cites while having offices only in Bengaluru, Mumbai, and Ahmedabad is a strong testament of it."

According to the company, at present around 40 percent of total loan book comprises borrowers from Tier 2 and Tier 3 cities while around 20 percent are from Tier 4 and Tier 5 geographies.

Some of these towns include Zirakpur (Punjab), Rudrapur (Uttaranchal), Dhenkanal (Odisha), Veraval (Gujarat), Aurangabad (Maharashtra), Jhalawar (Rajasthan), Salem and Madurai (Tamil Nadu), Bina and Katni (Madhya Pradesh), Jamshedpur (Jharkhand), Unnao (Uttar Pradesh), Jhajjar (Haryana), amongst others.

Speaking to YourStory, Harshvardhan said that the platform is adding close to 20-25 cities every month. Further, only 2,000 of the 50,000 customers coming on the platform on a monthly basis are from Tier 1 cities.

Most of Lendingkart's customers are MSMEs involved in the last-mile and are borrowing for the first or the second time. The average ticket size of loans requested on the platform is Rs 4 to 5 lakh with an average duration of 12 to 15 months. And the typical age of the borrower is anywhere close to 33 to 40 years of age.

Considering the run-rate, the company is positive that it will be adding close to 300-400 new cities by the end of this fiscal year.

So, what worked for Lendingkart?

Harshvardhan says that a strong reason for this growth is by understanding the needs of the consumers and answering their requests in a timely manner, even if it's a rejection.

Next is the convenience of the digital platform which saves time from from cumbersome physical checks and submitting documentation. Being completely digital also allows SME owners to reach Lendingkart at any given point of time.

Harshvardhan does not deny that reference is a huge part of incoming business requests.

Inch wide and mile deep

Harsh accepts that unlike its competitors, Lendingkart plans to focus on its current offerings and take it to more customers this year. He adds,

"We want to have a focussed approach and unlike competition not do different things or look at differentiated offerings for things. So, not much will change for us this year, accept for growth."

At present, Lendingkart looks at providing working capital loans and inventory management advances as credit.

Earlier in January when the company closed its Series C of $87 million, Harshvardhan stated that they were looking at launching a bill discounting credit product for MSMEs. The founder states that it is still in the works and will be launched in the second half of the year.

"We will stick to MSMEs and anything that can help them with their business. But the market is so huge that the merit lies in growing the business, until we have reached a scale and size."

Battling it out

Lendingkart faces competition from Bengaluru-based Capital Float who in April had announced it had closed its Series C of $67 million.

The latest fund-raise took Capital Float's total equity funding to nearly $110 million, and total debt funding from banks and NBFCs to $130 million till date. While Lendingkart in January said that it raised a total of $114 million in equity funding and close to $60 million in debt funding cumulatively.

In April, Capital Float said that the company has close to 60,000 customers and is adding 10,000-12,000 new customers every month. The founders also say that close to 50-70 percent of the loans are for repeat customers.

On the other end, Lendingkart states that it has more than 40,000 customers on its platform and is adding close to 1,500 customers every month.

Capital Float announced that it had added close to 50,000 customers alone last fiscal, while this number stood at more than 10,000 for Lendingkart.

The company also disbursed close to Rs 4,500 crore in loans through its platform, while looking to disburse another Rs 5000 crores this fiscal.

In comparison, Lendingkart had stated that it looked at reaching a target of Rs 1,500 crores in loans disbursed by end of March 2018 and reach a loan book to Rs 2,500 crore by end of FY 19.

Clearly, while Lendingkart is looking to take its basic lending product to the masses, Capital Float is looking at product diversification to cover the entire gamut of credit and increase its customer base.

[Funding alert] US-based fintech firm C2FO raises $200M from Softbank, will explore growth opportunities in India

C2FO India head Pradeep Gode says a large part of $200 million raised will be invested in India: to hire teams to serve customers, build the product line, and invest in future growth opportunities.

US-based fintech firm C2FO, which specialises in working capital loans, has announced a new funding round, led by Softbank's Vision Fund I in which Temasek and Union Square Ventures also participated.

The company's India head, Pradeep Gode, on Thursday said a large part of the $200 million raised from Japanese investor Softbank, would be invested here.

"A large portion of the capital infusion will be used to build on the leadership position we have created in India. We will continue to hire teams to serve our customers, build our product line, and invest in future growth opportunities," Pradeep said.

India is the fastest growing market for the company, which matched over $1.2 trillion of accounts receivable and accounts payable globally. Using algorithms, the company "matches" between accounts receivable and accounts payable to dynamically price the value for early payment in real time, the statement said.

It added that the investment was designed to accelerate the company's development of newer markets, including India.

"India is our fastest-growing market, showcasing the need for alternate sources of working capital as Indian businesses continue to scale into global organisations," Founder and Chief Executive Sandy Kemper said.

"We invested in C2FO because we think their disruptive innovation offers a solution to an industry that has traditionally lacked cost-efficient alternatives for businesses of all sizes looking to free up cash quickly," Akshay Naheta, Managing Partner for SoftBank Investment Advisers, said.

SoftBank recently announced that it had received approximately $108 billion in commitments for the planned establishment of its new fund, 'SoftBank Vision Fund 2'.

In a statement, the Japanese conglomerate commented that the objective of the fund is to facilitate the continued acceleration of the artificial intelligence (AI) revolution through investment in leading tech-enabled growth companies. Further, Softbank intends to invest close to $38 billion in the fund.