Agreement marks an extension of Lendingkart’s three-year working relationship with the bank receiving funds through MNTs
Lendingkart mainly meets the capital needs of small and medium-sized businesses
Founded in 2014 by Harshvardhan Lunia and Mukul Sachan, the company claims to have disbursed more than one Lakh loan to over 91,000 MSMEs to date
Ahmedabad-headquartered non-bank finance company (NBFC) and lending technology platform Lendingkart have raised $ 15 million from FMO, the Dutch entrepreneurship development bank.
The deal marks an extension of Lendingkart’s three-year working relationship with the bank receiving funds via NCDs (non-convertible debentures) and increases its cumulative exposure to $ 19 million with this transaction.
Lendingkart mainly meets the capital needs of small and medium-sized enterprises (SMEs). Founded in 2014 by Harshvardhan Lunia and Mukul Sachan, the company claims to have disbursed more than one Lakh loan to over 91,000 MSMEs in more than 1,300 Indian cities.
According to Lunia, Lendingkart’s investment over the years in building technological structures has helped the company overcome the pandemic, when physical distancing protocols hampered operations on the ground. These included its digital assisted real-time application process, in which a designated person from the team walks the potential client through their loan application process. Aadhaar and video customer identification features have also helped, as has the advent of services like e-Aadhar, digital signature, e-NACH for mandatory KYC requirements.
In a conversation with Inc42 in January, the founder claimed that Lendingkart witnessed a 5-fold increase in SME working capital requirements during last year’s Diwali holiday season, October to November, compared to at the same time in 2019. And after 4 to 5 months of stalling, its growth numbers normalized to pre-Covid levels.
“During the lockdown period in April and May 2020, we saw almost 1.5 Lakh requests from customers. Almost 60% of all apps came from our website or mobile app. Another 40% was through online channel partners like Paisa Bazaar. Global volumes have fallen by nearly 50% due to the uncertainty of the business environment, ”he said at the time.
During the financial year ending March 31, 2020 (FY20), Lendingkart reported disbursing a loan worth INR 2400 Cr to MSMEs, registering an 80% growth in AUM (assets under management) , 110% of gross income and 118% of profits before taxes. A Inc42 october story performed a detailed overview of Lendingkart’s second consecutive profitable year, with a turnover of 464 Cr INR.
Speaking of the recent funding, Lunia said, “FMO’s investment in Lendingkart is a testament to the company’s strong growth fundamentals and its continued track record and business performance despite the unprecedented impact of the pandemic. The funding also demonstrates the continued international support for the vibrant MSME sector in India and its critical role in contributing to India’s vision of becoming a $ 5 trillion economic vision. “
This new influx of funds into Lendingkart will be used to digitally extend the reach of financial products to the MSME segment.
To date, the company has raised $ 242.5 million in 11 rounds of funding from 14 investors. Its most recent round of funding was in May last year, worth $ 43 million, led by Bertelsmann India Investments, Fullerton Financial Holdings, India Quotient and Sistema Asia Capital.
In January, in order to facilitate better coordination with its agent partners across the country, Lendingkart launched an omnichannel SaaS platform for its agent partners, called Lendingkart xlr8.
The target audience for the SaaS product will be Partner Agents or Direct Selling Agents (DSAs) that Lendingkart has worked with for field sales. Its DSAs include Paisabazaar and Ruloans. Previously, due to the dispersed presence of DSAs, Lendingkart had to hire a manager for these agents. But now, since the demand for credit has increased sharply, there is a need to automate this process. Lunia explained that the need for a SaaS platform for its agents on the ground arose when the country went into lockdown at the end of March last year, in order to contain the spread of the pandemic of Covid-19.
Lendingkart’s new product will provide agents with an API suite. This will allow them to have the Loan Path Status available on their own platforms, so they can create, process and track all of their inquiries without depending on Lendingkart staff.
The company had claimed that xlr8 would allow faster processing of loan applications, with minimal documentation and without the need for offline media to communicate.
Consumer loans gain ground in India
India is home to around 1,263 digital lending startups, of which more than 147 (12% of the total 1,263) are backed by venture capital funds. With an influx of venture capital into B2B lending startups growing at a CAGR (2015-2019) of 72%, it remains the most favored sub-segment of the lending technology segment.
The share of financing for consumer credit startups was 16% or $ 393 million out of $ 2.4 billion between 2014 and the third quarter (Q3) of 2020.
Lendingkart’s consumer lending ambitions will face the challenge of other digital fintech startups such as ZestMoney, as well as global companies such as WhatsApp, Amazon and Flipkart, all of which seek to aggressively tap the demand for credit in the largely unserved segment of the population. which lives beyond Indian metropolises.
An analysis of the opportunities present in the consumer loan segment in India can be found in a recent Inc42 Plus report, Lending Technology in India: The Rise of Consumer Lending, Report 2020.