SME-lending firm Lendingkart raises $32M funding to strengthen data science capabilities


Digital lending platform for SMEs Lendingkart has raised Rs 205 crore ($32 million) in Series B round, taking the total amount of funding to Rs 260 crore ($41million) till date. Out of $32 million, $20 million was raised as equity and $12 million as debt.

HarshVardhan Lunia and Mukul Sachan (Co-founders of Lendingkart)

The fresh round of fund was led by Bertelsmann India Investments (BII), with participation from Darrin Capital Management and existing investors – Mayfield India, Saama Capital, and India Quotient. Last year in July, the Ahmedabad-based startup had raised $10 million in Series A fund.

Lendingkart will infuse this growth capital in 1) strengthening its data science capabilities, 2) enhancing its technology platform, and 3) infrastructure for improved mobile capabilities.

With Bertelsmann onboard, we look forward to leveraging its deep understanding of global financial products as well as internet businesses. With financial services leaders such as Arvato Financial Solutions as a part of the Group, Bertelsmann has strategic insights into the fintech space with end-to-end process knowledge and expertise in digital origination,”said Harshvardhan Lunia, Co-founder and CEO of Lendingkart Group.

From scratch

Founded in 2014, by ex-banker, ISB Hyderabad alumnus, Harshvardhan and ex-ISRO scientist, IIM Bangalore alumnus, Mukul Sachan, Lendingkart Group has built a technology platform to service the working capital financing needs of SMEs in India.

The company has partnered with leading online marketplaces and various industry and trade associations to service the financing needs of both online and offline SMEs. It offers loans ranging from Rs 50,000 to Rs 10 lakh.

“We have grown by 500 percent in our total employee strength. Currently, we have 45 partners which include platforms like Flipkart, Snapdeal, TradeIndia, Craftsvilla, Voonik, and Paytm. We are growing 20 per cent month-on-month,” said Harshvardhan.

To apply for a loan, an applicant needs to visit the Lendingkart website and upload their background information. The documents are then handed over to their subsidiary NBFC that verifies and transfers to its analytics team to determine the intent of the applicants to repay the loan amount. The entire process is integrated with technology and the NBFC disburses loan within 72 hours from the time of application. Currently, the startup is lending from its subsidiary NBFC AadriInfin Limited.

In the past two years, it has established its footprints in 135 cities across 22 states, but the current traction comes from cities like Delhi, Mumbai, Bengaluru, Ahmedabad, and Chennai. The focus is also to spread the outreach to Tier 3, 4 and 5 cities.

Lendingkart Group aims to tap into India’s huge underserved lending market by expanding its footprint further across India. “Our proprietary algorithms use over 2200 variables to assess the applicant’s credit worthiness. With funds being transferred in as less as 24 hours, credit-on-demand is becoming a reality,” said Mukul.

Addressing underserved lending market

SME financing has traditionally been limited to businesses that have solid financial credentials or assets to back the loan. However, startups like IndiaLends, Faircent, Kudos Finance and Investment and Capital Float are making it easier for SMEs to receive loans by leveraging technology and alternate data sources to underwrite.

Therefore, investors are very bullish in this sector, and have started infusing capital with positive hopes in terms of RoI.

Deepak Shahdadpuri, MD, DSGC Partners, who recently invested in IndiaLends, said, “Startups have a real opportunity to build a solid credit business in different parts of the value chain: credit sourcing, risk scoring, pricing, fulfillment, collections, compliance, risk management, better pricing, and NPAs, etc. The SME market in particular does not get anywhere close to the amount of debt that they require to fuel growth. There is a high degree of friction in the process today.”

Bengaluru-based Capital Float raised $25 million in Series B funded by Creation Investments Capital Management LLC; Faircent raised an undisclosed amount in Series A fund from JM Financial Products, a subsidiary of JM Financial Ltd, and IndiaLends raised $1 million from DSG Consumer Partners, Siddharth Parekh and Gautham Radhakrishnan.