Aye Finance Raises INR 87 Cr Debt Funding To Scale MicroLending Offerings

Gurugram-based fintech startup Aye Finance has raised INR 87 Cr ($10.6 Mn) in a debt funding round from Swiss impact investor BlueOrchard.

Aye Finance will deploy the investment to offer customised credit solutions to the lower-rung microenterprises. The startup said that the fundraise will help it strengthen its lending portfolio.

The funding round was part of a larger INR 1,500 Cr debt fundraise planned by the startup for the current year, of which it has already raised more than INR 700 Cr.

“…BlueOrchard has been partnering with us in our mission to create an inclusive India since 2017 and the multiple rounds of funds that we have received from them demonstrates their comfort with and commitment to our business,” Aye Finance MD and cofounder Sanjay Sharma said.

BlueOrchard Asia’s senior investment officer Pranav Murari said, “We are pleased to further strengthen our partnership with Aye Finance, an institution that is serving a client segment that has been largely underserved. We look forward to supporting their growth and thereby supporting the MSMEs sector in India.”

Founded in 2014 by Sharma and Vikram Jetley, Aye Finance offers secured and unsecured small business loans to unbanked microenterprises. The startup claims to be better placed to offer small ticket customised credit solutions to more than 60 Mn microenterprises that are overlooked by traditional lending channels.

This comes nearly eight months after the financial services startup raised INR 75 Cr in debt from Netherlands-based Triple Jump BV and Northern Arc. According to Crunchbase, Aye Finance has raised 609.2 Mn in both debt and equity funding till date. 

The startup counts marquee names such as Capital G (formerly Google Capital), Elevation Capital, Falcon Edge, A91 Partners, LGT and MAJ Invest as its investors. 

Aye Finance claims to have disbursed more than 4.6 Lakh loans worth INR 6,000 Cr through its branch network in 311 locations across 21 states.

The startup competes with the likes of ftcash, ARTH, FlexiLoans, LendingKart, LenDenClub, and Kinara Capital.

Aye Finance targets the credit-starved MSME sector of the country. These small entrepreneurs continue to be disregarded by banks for reasons ranging from lack of collateral to accessibility. 

Despite accounting for nearly 30% of the country’s GDP, only 1 in 10,000 micro scale enterprises has access to formal credit. A report pegs the country’s current addressable credit gap at around $397 Bn, pointing to the scarcity of working credit for these small and micro entrepreneurs.

As a result, the burgeoning space has seen a meteoric rise and a growing interest from investors. Last month, fintech startup Kinara Capital closed a $24 Mn equity funding round led by UK-based British International Investment. 

In September, fintech startup FinAGG bagged $3 Mn in a pre-Series A funding round led by BLinC Invest. In July, Lendingkart secured INR 75 Cr in debt funding round from GMO LLC and Triodos Investment Management. 

According to Inc42, India’s total addressable fintech market opportunity is expected to balloon to $1.3 Tn by 2025. Lendingtech is projected to account for a major chunk of this at around 47% or $616 Bn. 

Within the larger fintech sector, lendingtech saw the largest venture capital inflow last year.