While we have observed the trend of entrepreneurs turning VCs, there are very few instances where VCs go to the other side of the wall to tread the path of the entrepreneur. After a stint as partner and Managing Director (MD) at VC firm Canaan Partners, Alok Mittal started Indifi Technology. Indifi aims to address the $380 billion debt financing gap in India's MSME sector. The platform leverages technology to fill this vacuum, and work with partners to enable working capital or debt to smaller businesses.
The company works with online travel agencies, B2B platforms for traders, and e-commerce companies. Indifi collects demographic, business, and financial data, and analyses it to assist small businesses in securing credit from banks and NBFC . Alok Mittal, Co-founder, Indifi Technologies, says:
Rapid growth of data in this space has created a unique opportunity to address this gap.
In addition to Alok, Siddharth Mahanot, and Sundeep Sahi are the other co-founders at Indifi. Prior to Indifi, Siddarth worked at Indiabulls Housing Finance, Edelweiss Financial Services, and Citibank while Sundeep worked with IgniteWorld (a joint venture between Yahoo Japan, Bharti, and Softbank). Alok adds,
By and large, our aim is to hold the SMES' hand in securing working capital. As of now, there are very limited avenues for such businesses to get a loan without collateral.
The platform currently serves four segments including travel agencies, e-commerce vendors, small hotels, and personal loans to large cab aggregators.
“We have Ola, Shopclues, and Travel Boutique and a few other vendors who are using Indifi Services, while financing the merchant/driver base,” says Alok. At present, the platform is available in over 16 cities and plans are in motion to have a presence in each state by the end of this calendar year.
When asked about reasons for launching only in four verticals, Alok points out:
Our approach is to understand the challenges for merchants and lenders in a particular vertical. The unavailability of secondary data is a huge constraint for new-age lenders. Indifi primarily solves this pain for lenders by interpreting secondary data in the context of credibility and credit history.
Besides improving loan access, Indifi claims to reduce credit operations cost by 50-60 per cent, and enable disbursements within a week from application. The platform also secured an undisclosed amount in funding from Accel Partners, Elevar Equity, and prominent angels including Pramod Bhasin, Rajan Anandan, Gaurav Dalmia, Abhishek Goyal, Gagan Hasteer and Arun Tadanki.
Unlike first half of the last year, Indian startups in a few verticals have been witnessing lull in investment. However, Alok isn't surprised on slowdown. He adds,
Venture funding often goes through such cycle. Sometimes investors get gung-ho about particular segment and as a result they all end up betting different startups in the same segment. Later, they start taking tough calls like consolidations and write off which trigger momentary fear.
Meanwhile, most of the India focused funds had raised fresh corpus which have mandate for investment in homegrown startups. “Investment activities are bound to get momentum after the first half of current year. Funds are sitting on enough dry powder and sustainable business won't face challenges for fresh capital infusion,” says Alok.
Securing working capital loan is a big challenge for Indian SMEs; however, e-commerce companies like Flipkart, Amazon, Snapdeal, and Ola have partnered with various NBFCs to offer much-needed working capital to their merchant base. According to an industry estimate, MSEMs contribute over 45 per cent to overall industrial enterprises. According to a World Bank Report, about 87 per cent of Indian MSMEs do not have any access to finance and are self-financed. Indifi appears to be a painkiller for small merchants who otherwise run pillar to post for working capital loan.
Video Credits:Camera person: Manoj Upadhyaya
Production assistant: Vincent Aurther