[Funding alert] Fintech startup CredAvenue raises $90M in Series A round, looks at global expansion

Debt platform CredAvenue on Wednesday announced the closing of its Series A funding round worth $90 million led by Sequoia Capital, co-led by Lightspeed, TVS Capital Funds, and Lightrock, among others. Avendus Capital is the exclusive financial advisor to CredAvenue on the transaction.

With this funding — one of the largest Series A rounds in the Indian startup ecosystem — the fintech startup is now valued at about $410 million. 

In a conversation with YourStory, Gaurav Kumar, Founder and CEO, CredAvenue, said, 

“Although this is our Series A round, the platform is already doing significant business with the debt market participants in India. Hence, the entity was already discovered widely with the prospective investors. We needed the right set to come on board, who will partner with us strategically in the immediate hyper-growth stage. While we received multiple inbounds, we are content with the cap table at this moment.”

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Funds for tech expansion 

CredAvenue will use the capital to expand its product capabilities and ramp up the platform’s technology and data science infrastructure. 

Over the next few months, it aims to invest heavily in machine learning and artificial intelligence to improve its product offerings across each of its sub platforms. 

Gaurav said, “CredAvenue was founded because debt markets present a significant opportunity to be expanded at scale by leveraging technology. — the way equity markets grew in the early 1990s. India’s debt markets are still in the early stages as compared to developed countries.” 

Sakshi Chopra, Managing Director, Sequoia India, said, “Gaurav and team are veterans in the industry, and we are delighted to partner with them in their vision to deepen the debt markets in India, which remains underdeveloped at about 65 percent of GDP, well behind the global average of about 150 percent.”

CredAvenue operates a plug-and-play and fully portable platform, and it is planning to take it to offshore markets, starting with Southeast Asia, a year or so down the line. 

“Our choice of markets will be the ones that face similar problems we are looking to solve in the Indian market. We may also choose to take only one of the sub-platforms to specific geographies if it is relevant for the specific offering,” added Gaurav. 

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Looking at a larger debt market 

CredAvenue’s goal is to transform the debt markets globally, starting with India. It aims to deepen access to capital for the growing enterprise sector. In the lending segment, the startup competes with Lendingkart, NeoGrowth Credit, Vivriti Capital, Shubh Loans, Happy Loans, KhataBook, and OkCredit. 

Ishpreet Gandhi, Founder and Managing Partner, Stride Ventures, said, “We are ecstatic to work with CredAvenue’s strong founding team, which has extensive experience and is a forerunner in debt distribution. At CredAvenue, we see a huge opportunity to change the way debt is handled in India.”

Based on its H1 performance, Gaurav said the startup is tracking $22 million in revenue for the current financial year. At present, the startup is investing in people and technological capabilities, expected to provide CredAvenue with significant operating leverage and profitability from FY24. 

Aditya Sharma, Partner - Growth Equity, Lightspeed, said, "With its deep focus on technology, product innovation, and process automation, CredAvenue has created a thriving marketplace for credit discovery and technology-led monitoring and fulfilment.”

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What does the product do?

The end-to-end unified digital platform for the discovery, trading, execution, and fulfilment of all debt solutions globally provides a comprehensive debt product suite to its borrowers. 

It works towards fulfilling the following objectives:

1. Any eligible entity with a rational need for debt gets the desired debt on time and at the right price.
2. Any investor, institutional or retail, can invest in debt instruments after conducting their due diligence on the entity and the instrument and monitor the health of their investments until the last rupee is paid.
3. Create a vibrant secondary market for debt instruments.
4. Create a digital ecosystem for all market participants, like banks and financial institutions, payment service providers, account aggregators, fintech lenders, and SaaS platforms, to integrate seamlessly and provide services to debt capital seekers.

To date, CredAvenue has facilitated transactions worth close to $9 billion through the platform, while engaging with over 1,500 institutional borrowers and more than 750 investors, touching one million end-retail borrowers. 

“We are expecting to close the current fiscal with a deal volume of more than $20 billion,” Gaurav said.

CredAvenue growth figures: 

• Value of loans raised on CredLoans: $1.3 billion
• Value of bonds raised on Plutus: $1.2 billion
• Value of pools transacted on CredPools: $2.3 billion
• Number of invoices discounted on CredSCF: 5000+ 
• Loans per month on CredCo: 450,000+ 
• Portfolios managed on Pool Fulfillment platform: $3.7 billion

The Chennai-headquartered startup, which is on a hyper-growth trajectory since 2020, plans to accelerate its hiring.  At present, it has over 350 people spanning across different verticals — technology, sales, marketing, strategy, HR, etc. It aims to double its employee count from 350 to 700 by the end of FY 22. 

Despite the COVID-19 pandemic, more than 150 people joined the startup in the last 12 months. “We also plan on inorganic growth through strategic acquisitions,” Gaurav said. 

Gopal Srinivasan, Chairman, TVS Capital Funds, said, 

“Proactive regulatory reforms are having a game-changing impact on the debt market structure in India. CredAvenue’s platform can provide institutional investors access to larger liquidity pools at market-efficient rates and faster transaction times. Also, with its easy access and the right information, the platform is facilitating larger participation of retail investors in the corporate debt market, which is driving financial inclusion in the fixed income category and is an enabler for the national economic direction in the much-needed deepening of the bond markets in India. We are convinced that CredAvenue can be the leader in this transformative journey of Indian debt markets.”

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The next steps 

CredAvenue believes debt markets are poised for exponential growth. It aims to deepen debt markets in India and the world by building a robust infrastructure, which will help achieve the potential for wider participation. 

This will correct the skewed structure, wherein top-rated (AA and above)  rating borrowers have access to more than 80 percent of the debt market.

Sakshi said, “CredAvenue is a unique solution that simplifies access to credit for borrowers, ranging from a BB to an AA rating, and improves access to multiple debt products, like bonds, supply chain financing, etc., on a single unified platform.” 

Kartik Srivatsa, Managing Partner, Lightrock India, an early investor in CredAvenue, said, “We are excited to continue to back the team at CredAvenue as they emerge as one of the canonical businesses transforming the financial services sector through a differentiated platform that stands out in today's fintech ecosystem with a clear value proposition validated by a strong monetisation model.”