LenDen Club, an online peer-to-peer lending platform, has raised an undisclosed amount of investment in its seed round through Venture Catalyst, an online portal for seed investment.
The current round witnessed participation of Anirudh Damani, Daud Ali, Narendra Karnavat, Vikas Kapoor, Vikram Lakhotia, Krishna Jhunjhunwaala and Jayesh Shah.
With fresh capital coming in, the company will use these funds to create a strong technology platform and increase its reach to borrowers and lenders.
Founded in 2014 by Bhavin Patel and Dipesh Karki, LenDen club has a rather different approach towards peer-to-peer lending.
At LenDen Club, the bank depositor directly becomes lender to borrowers. The transaction takes place without any bank interventions. Removing large institutions like bank, saves huge money for the borrower and increases earnings for the lender.
The platform evaluates each borrower on multiple parameters which include screening of personal, financial and professional details to name a few. Verified creditworthy borrowers are listed on our platform. The lenders are free to choose borrowers based on their risk appetite. Ideally, multiple investor (lenders) invests a small portion in every borrower.
LenDen Club has a stringent credit verification process to minimize the risk and probable defaults. However, if such a situation arises, our unique and first of its kind Lender Protection Fund (LPF) protects the lender’s principal amount. LenDen Club is the only peer to peer lending marketplace in India to offer Lender Protection Fund (LPF) to save lenders’ investment in case of borrower payment defaults.
The platform currently has 725 lenders and 1,120 borrowers. It connects salaried borrowers to individual lenders which uses a combination of traditional and non-traditional data points to validate credit-worthiness of borrowers.
The company claims that it has borrowing average of Rs.95,000. As of generating revenues, the company is charging 1-3% commission for connecting individual borrowers to lenders.
The lender has an option to chooses how much s/he wants to earn from peer-to-peer loans, i.e. they can choose the interest rate from 12.5% to 30%.
Bhavin Patel, co-founder and chief executive, LenDen Club, said,
We wanted to bring traditional lending on digital platform. Securing seed funding at such a nascent stage gives us the boost we have been looking for. This will allow us to further improve the platform and reach out to more users.
Narendra Karnavat, angel investor at Venture Catalysts, said,
There is a lot of scope for peer to peer lending platform in India. This web based platform for lending business offers good opportunity for growth. Since there are a lot of regulatory & RBI hurdles in this industry, it is considered to be high risk-return investment. To eliminate the risk associated in this segment, there has to be proper solutions in place to keep the regulatory hurdles out.
According to Venture Catalyst, the peer-to-peer lending space is pegged to become a $4-5 billion market within the next three to five years, and hence the investor interest in LenDen. Similar startups raising funds in this domain include Buddy, Faircent, Capital Float, India Lends, etc. Capital Floar is the more heavily backed one, with capital raised going in excess of $13 Million.