In one of largest funding rounds in Indian SME space, LendingKart secures $87M. But there’s more

Harshvardhan Lunia, Co-founder and CEO of LendingKart Technologies, is a happy man.

“As we have learnt from the ecosystem, you should never say no to equity money when it is coming your way,” he says.

The company on Monday announced the closing of their $87 million Series-C round, one of the largest in the SME lending space, led by Singapore’s Fullerton Financial Holdings Pte Ltd (FFH), a subsidiary of Temasek Holdings.

LendingKart Technologies Private Limited, which is a part of the LendingKart group, in September last year had announced raising close to $10.5 million as a continuation of their Series C from Singapore-based Sistema Asia Fund along with participation from current investors - Bertelsmann India Investment, Mayfield India, Saama Capital, India Quotient and Darrin Capital Management.

While speaking to YourStory, Harsh explains that the first part of this round was for existing investors to invest, before the company went for PE investments. However, the talks with Fullerton were on since last year.

Till now, the group (which includes LendingKart Technologies and LendingKart Finance) has raised a total of $114 million in equity funding and close to $60 million in debt funding cumulatively.

The founders state that of this amount $15 million is already being utilised for technology and salaries while approximately $100 million is still available as runway for the company to use. Harsh explains that most of the loans are deployed through the debt funding pool raised by the firm.

Speaking on the investment, GAN Chee Yen, CEO of Fullerton Financial Holdings, said,

“We are pleased with the opportunity to deepen our exposure in India’s rapidly growing financial services market. Today, we are witnessing the rapid advancement and adoption of technological innovation in India. We believe that the deployment of technology to develop scalable and accessible financial services platforms, incorporating big data analytics and machine learning, will be critical to any lending business serving the underbanked and underserved customers in India. We are committed to supporting Lendingkart Group on its journey to become a leading digital lender in India.”

So, what will the funds be used for?   

While sticking to their strength of SME loans the company doesn’t have elaborate plans to diversify their core strength. However, LendingKart is eager to experiment through two other credit products by the middle of this year.

The founders hint that one of them could be a bill discounting product. 

Lending from their own books, the company is also looking to explore the co-lending model in the coming fiscal.

Further, the company looks to invest some of this amount on strengthening its technology and analytics capabilities.

At present, LendingKart gives out SME loans with an average ticket size of Rs 4-5 lakh for a time period of 9-12 months.

However, the company is looking to deploy loans with bigger ticket sizes of Rs 10-15 lakh for a tenure of 12-14 months this year. The company claims to have dissipated close to 20,000 loans across 950 cities, until now. This equates to a customer base of 13,000 SMEs.

In the coming fiscal (FY 18-19), the firm is looking to build its loan book to Rs 2,500 crore while cultivating its customer base across 2,000 cities in the country.

This fiscal ending March, the company is looking to reach a target of Rs 1,500 crore.

Having acquired online lending marketplace KountMoney in 2016, Harsh states that the company isn’t looking for any more acquisitions. However, the company is keeping a keen eye on players in the analytics as well as the digital marketing space.

LendingKart’s financial health

The LendingKart Group has two subsidiary companies – LendingKart Technologies, which has developed the credit evaluation model and upgradation of the technology, and LendingKart Finance, which uses this credit model to evaluate and disburse loans to borrowers.

According to Registrar of Companies, LendingKart Technologies’ revenue has grown from Rs 2.69 crore in FY 2015-16, to Rs 4.75 crore in FY 2016-17. The subsidiary also made losses of approximately Rs 6.56 crore and Rs 24.9 crore.

For LendingKart Finance, the total revenues for FY 2015-16 stood at Rs 6.15 crore and grew to Rs 33.5 crore in FY 2016-17. The company losses also grew from Rs 3.70 crore in FY 2015-16 to Rs 14.1 crore in FY 2016-17.

Just last year in August, Bengaluru-based CapitalFloat also announced raising $45 million in Series-C funding led by Silicon Valley-based Ribbit Capital, along with participation from existing investors SAIF Partners, Sequoia India and Creation Investments.

The company then announced that total amount of fresh capital raised in the last 12 months was over $112 million (Rs 730 crore) for the company.

But for Harshvardhan, the fundraising spree for the moment has settled. He says,

“The investment will last us for almost two years now. And it relieves the founder of one more job.”