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The deal marks an extension of Lendingkart’s three-year working relationship with the bank receiving funds through NCDs

Lendingkart primarily caters to the capital requirements of small and medium enterprises

Founded in 2014 by Harshvardhan Lunia and Mukul Sachan, the company claims to have disbursed more than 1 Lakh loans to more than 91,000 MSMEs to date

Ahmedabad-headquartered non-banking finance company (NBFC) and lending tech platform Lendingkart has raised $15 Mn from FMO, the Dutch entrepreneurial development bank. 

The deal marks an extension of Lendingkart’s three-year working relationship with the bank receiving funds through NCDs (non-convertible debentures) and increases its cumulative exposure to $19 Mn with this transaction. 

Lendingkart primarily caters to the capital requirements of small and medium enterprises (SMEs). Founded in 2014 by Harshvardhan Lunia and Mukul Sachan, the company claims to have disbursed more than 1 Lakh loans to more than 91,000 MSMEs in over 1,300 Indian cities. 

According to Lunia, Lendingkart’s investment over the years in building technological structures helped the company tide over the pandemic, when physical distancing protocols hampered on-ground operations. These included its assisted real-time digital application process, where a designated person from the team guides the potential customer through their loan application process. Aadhaar and video customer identification facilities also helped, as did the advent of services such as e-Aadhar, digital signature, e-NACH for mandatory KYC requirements. 

In a conversation with Inc42 in January, the founder claimed that Lendingkart had witnessed a 5x surge in requirements of SME working capital during last year’s Diwali festive season from October-November, as compared to the same period in 2019. And after 4-5 months of lockdown, its growth numbers normalised to pre-Covid levels. 

“During the lockdown period in April and May 2020, we saw close to 1.5 Lakh applications from customers. Close to 60% of all applications came through our website or the mobile app. Another 40% were through online channel partners like Paisa Bazaar. The overall volumes were down by almost 50% due to the uncertainty in the business environment,” he had said at the time. 

In the fiscal year ending March 31, 2020 (FY20), Lendingkart claimed to have disbursed credit worth INR 2,400 Cr to MSMEs, registering a growth of 80% in AUM (assets under management), 110% in gross income and 118% in profits before taxes. An Inc42 story from October carried a detailed overview of Lendingkart’s second straight profitable year, with INR 464 Cr in revenue. 

Speaking about the recent funding, Lunia said: “FMO investment in Lendingkart is a testimony of the company’s strong growth fundamentals and its consistent track record and business performance despite the unprecedented impact of the pandemic. The funding also demonstrates the continued international support towards India vibrant MSME sector and its critical role in contributing to India’s vision to become a $5 Trillion economy vision.”

This new influx of funds into Lendingkart will be utilised towards expanding the reach of financial products to the MSME segment digitally. 

To date, the company has raised $242.5 Mn in 11 funding rounds from 14 investors. Its last funding round came in May last year, worth $43 Mn, led by Bertelsmann India Investments, Fullerton Financial Holdings, India Quotient and Sistema Asia Capital. 

In January, with a view to facilitating better coordination with its agent partners across the country, Lendingkart had launched an omnichannel SaaS platform for its agent partners, called Lendingkart xlr8. 

The target audience for the SaaS product will be agent partners or the direct selling agents (DSA) with whom Lendingkart has collaborated for on-ground selling. Its DSAs include Paisabazaar and Ruloans. Earlier, due to the scattered presence of the DSAs, Lendingkart had to employ a manager for these agents. But now, given that loan demand has risen sharply, the need is to automate this process. Lunia explained that the need for a SaaS platform for its on-ground agents was felt when the country went into lockdown in late March last year, to contain the spread of the Covid-19 pandemic. 

Lendingkart’s new product will provide agents with an API suite. This will enable them to have the loan journey status available on their own platforms, so they can create, fulfil and track all their applications without depending on Lendingkart personnel. 

The company had claimed that xlr8 would enable faster processing of loan applications, with minimal requirement of documents and no reliance on offline media to communicate.

Consumer Lending Scores Big In India

India is home to approximately 1,263 digital lending startups, out of which over 147 (12% of the total 1,263) are backed by venture capital funding. With venture capital inflow in B2B lending startups growing at CAGR (2015-2019) of 72%, it remains the most favoured sub-segment within the lending tech segment. 

The share of funding for consumer lending startups was 16% or $393 Mn out of $2.4 Bn between 2014 and the third quarter (Q3) of 2020. 

Lendingkart’s consumer lending ambitions will face a challenge from other digital fintech startups such as ZestMoney, along with global companies such as WhatsApp, Amazon and Flipkart, all of which are looking to aggressively tap into the demand for credit in the largely unserviced segment of the population that lives beyond India’s metro cities. 

An analysis of the opportunities present in India’s consumer lending segment can be found in a recent Inc42 Plus report, Lending Tech In India: The Rise Of Consumer Lending, Report 2020.