While the pandemic has hit a lot of sectors hard and made life difficult for many, lending start-ups in the country have received a big boost. As more people lost their jobs and others looked to save their businesses, the demand for lending apps for financial support has soared. According to a Boston Consulting Group and Federation of Indian Chambers of Commerce and Industry (FICCI) report, the alternative lending sector is going to see increased investments to $5.6 billion between 2021 to 2025.
Barely a month after Bengaluru-based digital lending platform KreditBee, through its holding entity Finnov, had raised $75 million from Azim Premji’s PremjiInvest, Mirae Asset Ventures, Alpine Capital, and Arkam Ventures, the company has raised another $70 million in a follow-on Series C funding round co-led by TPG-backed NewQuest Capital Partners and Motilal Oswal Private Equity.
The conclusion of the round, which raised a total of $145 million to become one of the largest funding rounds for an Indian lending start-up since the onset of the pandemic, saw the exit of Finnov’s Chinese investors Shunwei Capital and Xiaomi. They had invested around $8 million in KreditBee’s Series A round in 2017.
The valuation of the firm after the round was not ascertained.
KreditBee, a platform facilitating loan transactions between the borrowers and the Non-Banking Financial Companies (NBFCs) or banks, provides personal loans to young professionals in the range of Rs 10,000 to Rs 200,000 for the tenure of 2 to 15 months and at an interest rate of up to 2.49%. KreditBee, at present, has a registered user base of over 25 million and more than 1, 200 employees. Its competitors include MoneyTap, EarlySalary, LazyPay, and Sachin Bansal’s Navi.
In a press release, KreditBee announced that the fresh capital would be deployed to expand its lending portfolio beyond unsecured personal loans and into different “lending products, value-added services, deeper channel integrations, and partnerships. Solutions under evaluation include secured lending products, as well as the democratization of other auxiliary products and services around loans, like insurance and cards.”
The announcement comes soon after Koo, a social networking service based in Bengaluru, had its Chinese investors (including Shunwei Capital) exit from its portfolio. Zomato’s Chinese investors had been bid adieu in recent times as well. The escalating border tensions between India and China, which has been hovering over the sectors like a dark shadow and led to the banishment of many Chinese apps from the Indian market, including TikTok, has made its presence felt in this sector as well.
Madhusudan E, co-founder, and CEO, Finnov, said, “A complex demography like India requires simple, effective, and impactful lending solutions, that comes with a deeper understanding of the consumer financing needs of the ecosystem. We are happy to onboard investment partners with us who share the same vision as we do as to how personal finance should graduate from a luxurious aspiration to a trivial commodity, available at the click of a button.”
Amit Gupta, founding partner, NewQuest Capital Partners, said, “The requirements of the average value-seeking middle class Indian can only be met by a multitude of lending products. One size doesn’t fit all. We are excited to become a shareholder of Finnov at this juncture and to support its next stage of development in offering innovative lending solutions to the dynamic India market.”
Finnov, registered in March 2016, also Krazybee Services Private Limited, a non-banking financial company (NBFC). The group launched KreditBee in May 2018 focused on full-stack digital lending for young professionals.
Talking about the development, Vishal Tulsyan, CEO and MD at Motilal Oswal Private Equity remarked, “We are keen on businesses that are scalable and yet built on sound unit economics, and KreditBee ticked all the boxes. With the sustained focus and momentum, we see the platform becoming a mainstream Fintech Lending solution in the Asian market.”