[The Turning Point] How working for a company that shut down gave KredX founder the idea to start up
Turning Point is a series of short articles that focusses on the moment when an entrepreneur hit upon their winning idea. Today, we look at Bengaluru-based KredX, an invoice discounting marketplace.
IIT alumnus Manish Kumar, co-founder of invoice discounting startup, was working for a company which was profitable on paper, but lacked cash flow and was always stuck in receivables. This ultimately led to the shutdown of the company.
Manish realised that for any financial requirement, companies have always approached banks and NBFCs, which largely operate on collaterals. While trying to find alternate source of funds, IIT Kanpur alumni Manish and his friend Anurag Jain understood that account receivables are actually an asset on a company’s books, which can be monetised by selling the same at a discounted rate.
Manish started thinking and navigating around the problem, and realised that these receivables are an underlying asset, which if appropriately harnessed, can manage cash flow.
At the same time, around 2015, their bets on alternative investments were snowballing in India. So, it was evident that a holistic ecosystem can be created by merging the two into an exchange where one side feeds the other.
“It is like selling an asset to someone that has a call option attached to it from the counterparty to buy the same at an agreed price. A dipstick in the market made us realise the untapped potential of the market and the need for a product that caters to both investors and businesses in need of working capital,” says Manish.
Once Manish identified the pain point, the prospective solution naturally fell into place, and the next step was to understand the regulations as he was venturing into the financial landscape.
He started talking to regulators and sought their guidance. Eventually, they started working on the minimum viable product (MVP), and that is how KredX came into existence.
The Bengaluru-based startup was created as a platform to bridge the cash flow gap by connecting high-growth companies in need of working capital with investors. It helps businesses meet their short-term working capital needs by facilitating discounting of their unpaid invoices.
The platform works closely with suppliers, corporates, and investors to ease the money flow in a supply chain ecosystem. KredX claims it gives funding within 72 hours of financers buying out the invoice.
In October 2016, KredX raised seed funding of $750,000 from Prime Venture Partners, $6.25 million in Series A funding from Sequoia Capital, and its Series B funding of $26 million was led by Tiger Global management.
Currently, KredX, works with over 120 corporate houses, including big names such as Tata Croma, Future Group, and Vedanta to name just a few.
(Edited by Megha Reddy)