This startup is leveraging cutting-edge tech to provide on-demand credit to MSMEs

Democratising the digital lending space can ease MSMEs into growing exponentially and positively contributing to the economic growth of the country. Founded in 2017, Fundfina has successfully created a marketplace to enable business opportunities for MSMEs across India.

This startup is leveraging cutting-edge tech to provide on-demand credit to MSMEs

Tuesday September 20, 2022,

4 min Read

What started as a quest to find financing options for my own SME became the starting point for Fundfina’s journey, recalls Rahul Tripathy, Founder, CEO, Fundfina. At a time when fintechs weren't a household name, Rahul and Nishant Bhaskar started Fundfina to solve the problem of access to affordable and appropriate financing for MSMEs.

The problem that has existed for decades and hasn’t been solved by the traditional institutions needed a fresh perspective and that is what inspired us to start Fundfina,adds Rahul.

Building a marketplace for lenders and borrowers

MSMEs are the backbone of a country’s economic development (30% of GDP), especially in India where the sector is constantly contributing toward positive growth, business innovation as well as employment generation. However, to be able to reach their utmost potential, it is important to support MSMEs with adequate financial resources. Multiple constraints restrict MSMEs from prospering or growing well in the market.

To address the constraints, Rahul and Nishant have worked on building a full stack marketplace at Fundfina. This solves the accessibility problem by bringing nano and micro businesses on the same platform as NBFCs, MFIs, and Small Finance Banks.

Our embedded finance platform enables brands and digital marketplaces to run their working capital lending program. Brands can mix-match our APIs and build smart use cases across user acquisition, conversion, and retention, says Nishant.

Affordable, accessible, and appropriate

A typical MSME business owner struggles through daily business challenges and hence, financial planning especially estimating credit needs often takes a back seat. Fundfina’s solutions make it easy for businesses to avail on-demand credit facilities in a contextual manner without much hassle. TheCiti never sleepscampaign by Citibank inspired us to a great extent. Back in the late 1970s, Citi said, people should have access to their money 24 hours a day. We decided to take it a step further by providing people access to credit 24 hours a day, shares Rahul.

Bikram Bajaj, Co-founder and Chief Product Officer at Fundfina believes curating appropriate lending products is as important as accessibility. As the saying goes in the Bengaluru tech space -what works in Indiranagar doesn’t work in Koramangala. This is true in the sense that India is a geographically and culturally diverse country and most legacy lenders including NBFCs and banks have not been able to cater to varying needs of MSMEs, he states.

We have had business owners using Term Loans to acquire inventory because the daily instalments are a smaller burden on their overall cash flows while some business owners prefer a line of credit that allows them to make a balloon payment. BNPL has not fully caught the fancy of B2B payments but Fundfina has already launched such a product for those price-sensitive MSMEs who do not like to incur interest costs, adds Bikram.

Disrupting through technology

Fundfina leverages state-of-the-art technology to streamline financial services with a deep understanding of the customers. The company uses Artificial Intelligence (AI) to automate workflows for faster processing and provides "just-in-time" credit and Machine learning (ML) to enable bringing more customers under the line of formal credit by leveraging alternate data which provides a lot of behavioural signals. Moreover, user onboarding is simplified using a deeply integrated India stack for KYC processes.

Amidst a sea of competition in the fintech world, founders describe their use of advanced tech and deep understanding of the segment as the main differentiating factor. We embed our offerings with partners and build financial products that are scalable and sustainable. These products give users the power to customise their experience, says Nishant.

The company also offers a cutting-edge data product called TrueScore(™) that uses digital transaction and demographic data to provide insights as deep as the probability of default, delinquency as well as a write-off.

Global expansion plans

With a 70 percent of customer retention rate and over a million merchants, Fundfina has managed to record some extraordinary growth numbers. Convenient onboarding with APIs that allows users to build their financial journey and an inclusive hybrid work culture, the startup is ticking all the right boxes to take the business to the next level of growth.

We are growing 25-30 percent month on month in revenues. Overall we have also seen 10x growth in product adoption. For an early-stage startup, product market fit is the most crucial factor for success. Over the last 12 months, we have seen business with each of our partners grow 10x. We plan to expand to 2.5 million merchants by the end of 2022, shares Rahul.

Fundfina is now ready to set its foot in the international market. Currently running a pilot for Bangladesh in a United Nations Development Program-run accelerator SDGia, the startup has also been approached by top tier high street banks in Nepal, Laos, and Cambodia.