Michael & Susan Dell Foundation Invests in Bangalore-based Kinara Capital


Kinara Capital is a Bangalore-based social enterprise that provides debt capital loans to micro and small businesses in India. An award-winning company, Kinara operates in 30 districts across 4 states in India. Committed to building the debt gap in India by financing MSMEs, the enterprise recently received an equity investment from Michael & Susan Dell Foundation (MSDF), the Dell family’s non-profit philanthropy organisation based in Texas. This move allows the Dell family foundation to hold a minority equity stake in the company, with the addition of Portfolio Lead of Family Economic Stability Satyam Darmora to the Board of Directors. The portfolio includes 25 micro-finance and skill-training institutions.

The initiative is geared towards helping urban poor families in India by providing them financial services.

Hardika Shah

Ms Hardika Shah, CEO and founder of Kinara Capital says, ‘We’re at a growth phase in the MSME financing industry, and the equity infusion from MSDF allows us to access new debt and expand our portfolio. We have doubled our portfolio in the last 6 months and with this capital boost, we plan to be at ~Rs.25 CR portfolio this year.

At Kinara, we have innovated our customer management processes by deploying psychometric testing of the borrower and cash flow based analysis of the business. With this capital, we will deploy field agent technology and move these processes away from paper to integrated systems creating more operational efficiency and improving our customer service.

In the micro and small business segment, we often work in the white spaces between other players by innovating on products types and features. The space is large ($200B and growing), so there’s much to be done in terms of product and business model development. We’re not just looking at collateral-free loans for MSMEs, we aspire to become their “go-to” provider for support beyond capital.’

Currently, there’s a 1 trillion rupee debt gap between micro-finance and commercial capital. The most recent World Bank Group International Finance Corporation report on MSMEs in India notes,

‘The Micro, Small and Medium Enterprise sector is crucial to India’s economy. There are 30 million enterprises in various industries, employing 69 million people. Together, these account for 45% of the industrial output and 40% of the exports.

Although 95% of Micro, Small and Medium Enterprise units are informal in nature, the contribution of the sector to India’s GDP has been growing consistently at 11% per annum, higher than overall GDP growth of 7-8% .

Poor infrastructure and inadequate market linkages are among key factors that have constrained the growth of the sector. However, lack of adequate and timely access to finance has continued to be the biggest challenge.’

Kinara Capital hopes to address this predicament by providing collateral free loans in the range of Rs 50,000 to Rs 10,00,000 (10 Lakhs) for asset finance and working capital to MSMEs.

Their aim is to create at least 100,000 net new jobs, potentially impacting 1 million lives in a short span of five years.

Mr Darmora adds, ‘One wage earner per family typically supports a household of four in India. The economic growth of MSMEs amplifies the social impact on families and an increase in income can drive improvements in children’s education and well-being. Through this investment we aim to meet the debt capital needs of urban low-income micro-entrepreneurs to help them grow and scale their businesses, improve their livelihoods in measurable ways and meet our mission of transforming the lives of children living in urban poverty. I look forward to working closely with Kinara’s dynamic team.

Launched in 2011, in a span of 4 years, Kinara Capital claims to have financed over 1,200 loans, mostly to first generation entrepreneurs, with a 99.9% recovery rate. With over 80% of their portfolio in urban areas, their projects span a variety of small-scale manufacturing businesses like  kitchen appliances, artisan products, eco-friendly products, agri-equipment, packaging products and more.

Ms. Hardika Shah caught our attention because of their innovative approach towards solving the sizeable lending issues in India for the micro, small, and medium enterprises (MSMEs) that contribute to more than 20 percent of the nation’s GDP.‘ Mr. Debasish Mitter, Country Director, India, Michael & Susan Dell Foundation

Kinara aims to immediately impact social and economic livelihood of MSME business owners and their families through their financially inclusive solutions, and the recent Dell family foundation investment is an important step towards that goal.