Bengaluru-based Avail Finance, which provides loans to blue-collared workers, raised funding of $17.2 million in a round led by Matrix Partners. The round is a mix of debt and equity.
Fintech startup Avail Finance has raised $17.2 million Series A funding led by Matrix Partners. This round saw participation from Bhavish Aggarwal and Ankit Bhati, Co-founders of cab aggregator Ola, Binny Bansal, Co-founder and group CEO of Flipkart, Kunal Shah, Founder of Freecharge, and Manish Patel, founder and CEO of Mswipe.
The fund-raise is a mix of debt and equity, with credit lines from multiple NBFCs. Founded last year by Ankush Aggarwal and Tushar Mehndiratta, Avail Finance primarily caters to the blue-collared workforce, that is largely ignored by organised lending institutions.
A technology push
Last year, Avail had raised $200,000 in a funding round led by Ola Co-founder and CEO Bhavish Aggarwal.
“The fundraising will help us in different ways. The equity part of the funding will help us in building the team, product and investing more in the technology platform. While the debt, and credit lines will help us further deepen our debt and credit lines,” says Ankush.
Ankush and Tushar have a background in computer science engineering. While Ankush graduated from the University of Illinois at Urbana-Champaign and has worked with Ola, Tushar is an alumnus of IIT-Roorkee and has previously worked with Adobe.
Ankush says the team is focussed on building a stronger technology backend that makes the product more accessible and user-friendly.
“We are looking to introduce deeper data science mechanisms, bring in Machine Learning, Artificial Intelligence, better scoring algorithm. We already have local languages, but want to make the product more user friendly. That means, we might introduce more voice, visuals and other elements,” says Ankush.
Focussing on an untouched market
The team is looking to invest in the expansion of its customer base from 4,000, and its loan book from Rs 5 crore. Ankush says the company's primary competition is the local lenders who charge interest of close to 10 percent.
With low credit card penetration and lack of structured credit history, this large segment of the Indian population resorts to availing credit from informal sources at higher interest rates. Leveraging alternate digital data and the power of the India Stack (Aadhaar, eKYC, UPI), Avail aims to create a seamless lending and repayment process to serve this segment.
Vikram Vaidyanathan, Managing Director, Matrix India, said:
“Consumer lending to the blue-collared workforce is a large, untapped and hard to solve opportunity. We are impressed by Avail’s differentiated sourcing and underwriting strategy, and are privileged to partner with Ankush and Tushar on their journey. We believe it’s still early days of the India Fintech story, and will continue to invest in the space.”
At present, the firm is lending capital raised by micro-finance institutions (MFIs).
The working model
Avail Finance works on a B2B2C model, where it work with employers, who in turn help their blue-collared workforce get loans through Avail. The firm, which gives small short-term loans of Rs 15,000 and Rs 20,000, grows its revenues through upselling. This means it gives loans of small amounts first and, depending on the customer’s re-payment history, decides whether or not to disburse bigger amounts. The highest loan amount offered on the platform is Rs 50,000.
Manish Patel, Founder and CEO, Mswipe, adds that Avail represents a fundamental shift in India’s lending and financing landscape.
Avail Finance and other such players have a strong differentiator when compared to LoanAdda and LoanMeet. The former is looking to solve problems for blue-collar workers, while the latter focuses on subprime customers.
Apart from Avail Finance, Mumbai-based financial inclusion startup SERV’D also focuses on the blue-collar segment and is trying to empower them with basic financial products.
“With Avail, we want to make credit easily available and accessible to everyone. Especially, a segment of consumers who haven’t been targeted. By solving for the core of the problem of not having a credit history, using advanced technology, data sciences and artificial intelligence, we are bringing a new approach to an age-old problem. The huge chunk of people in the urban mass who are currently being ignored by the formal lending sector will stand to benefit from Avail’s solutions,” says Ankush.