[Funding alert] Digital lending startup Happy raises $20M, plans to reach 1M new borrowers

Mumbai-based digital lending startup Happy has raised $20 million in fresh capital to grow its artificial intelligence (AI) powered lend-tech model to provide flexible digital loans to micro and small business in over 500 locations across India. With its new funding, the startup will also grow its loan portfolio multiple-fold disbursing over 1 million loans over the next fiscal and will reduce loan fulfillment times to below one minute.

The funding includes a mix of equity from Indian and US strategic investors, and financing lines from institutions including DMI, an Indian non-bank finance company.

Speaking on the announcement, Happy’s Co-founder & MD Manish Khera, said,

“What inspires me is that there are millions of people who need financial assistance for basic economic mobility and growth. Micro-enterprises contribute 37.5 percent to India’s economy and employ 20 percent of India’s workforce; over 100 million people. Small flexible loans help create greater business opportunities, stabilise cashflows, and enhance livelihoods for small business owners and their employees. Making one million small loans means building a loan portfolio of over $500 million and catalysing economic wealth of $10 billion for micro- and small enterprises in a single year.”

Founded in 2016 by Manish Khera, Gautam Ivatury, and Shweta Aprameya, Happy has disbursed over $20 million (Rs 140 crore) through over 32,000 loans to more than 80 different kinds of businesses in its first two years of operations. With access to 2.5 million micro enterprises across 20 business partners, Happy is now ready to make an orbit shift with digital lending in India.

In an official statement, the startup said that its mission is to support and increase the financial strength of small and micro-entrepreneurs, the heart of Indian commerce.

Happy's Co-founder Gautam Ivatury added,

“We have been fairly successful in getting the right technology to serve our customer – every leg of the process is digitised to offer a simple & easy borrowing experience while managing risk -  with AI, and machine learning (ML). With the infusion of more resources we plan to explore more advanced technology such a blockchain in the credit underwriting process.”

Recently, another Mumbai-based digital lending startup InCred also announced the closing of its Series A round of Rs 600 crore led by Dutch development finance institution FMO with participation from US-based asset manager Moore Capital, India/Latin America-focused PE fund Elevar, and Alpha Capital. In April, Bengaluru-based ZestMoney also received $20 million in Series B led by Washington DC-headquartered fintech investor Quona Capital.

As of now, Happy sees itself at the beginning of a journey to deepen its relationships with its customers, by combining data, fintech, and an unmatched understanding of micro- and small business finance.

Also Read: 10 women entrepreneurs making waves in the fintech space

How banks can be the game changer for the SME lending business