Bengaluru-based fintech startup FinBox has raised an undisclosed amount in Pre-Series A funding round led by Arali Ventures. The round also saw participation from marquee angel investor Anup Pai, founder of Fintellix.
Arali ventures majorly focuses on providing product build and early scale capital to enterprise technology ventures serving the Indian and global markets. FinBox will use the raised funding to further product research and development and to drive adoption.
FinBox was also a part of PayPal’s 2017 fintech cohort and essentially digitises customer journeys for banks and non-banking financial companies (NBFCs).
Founded in 2015 by Rajat Deshpande, Anant Deshpande, Nikhil Bhawsinka and Srijan Nagar, its credit risk management platform with proprietary data connectors allow financial institutions to lend to self-employed merchants and new-to-credit customers, which would otherwise be left out of the addressable market. Finbox claims its platform is used by consumer lending NBFCs and currently processes 1 mn loan applications every month, most of which are from new-to-credit customers.
“We believe that in India banking and financial services will be driven to balance credit risk while increasing penetration. Finbox’s tech+data approach is ideally suited to ride that wave,” Arun Raghavan, cofounder and partner of Arali Ventures, said in a press statement.
The statement went on to highlight the vision of the startup to reimagine lending and accelerate financial inclusion through big data and machine learning tools.
“Financial services firms will be able to leverage their dark data and consume new data sources to significantly improve credit risk performance while enhancing user adoption.”
The startup’s tech platform includes two application program interfaces (APIs) — DeviceConnect and BankConnect — that offer alternative sources of data to financial institutions, which can be leveraged to bring in automated credit decisions on new applications.
While the DeviceConnect API has seen large-scale adoption by NBFC customers and has significantly reduced the portfolio credit risk of loans, the BankConnect API enhances the digital onboarding of customers across loan segments.
Last week, another SME lending platform, Clix Capital, raised $40 Mn (INR 282 Cr) in fresh funding from AION Capital. The Gurugram-based startup plans to use the funds to further push into the consumer lending segment while continuing to build its digital platform.
The opportunity in the Indian SME lending market is huge. According to a May 2019 IBEF report, the public deposit of Non-Banking Finance Companies (NBFC) increased from $293.78 Mn in FY19 to $4.95 Bn (INR 319.05 Bn) in FY18, registering a compound annual growth rate (CAGR) of 36.86%.