CapitalG Marks Its First Bet In Indian Online Lending Sector With Aye Finance

CapitalG, the growth-stage investment arm of Google’s parent company Alphabet, has led a $21.7 Mn (INR 147 Cr) Series C funding round in the online lending startup AYE Finance.

This marks the first bet for CapitalG in the Indian online lending sector. CapitalG led the round with an investment of $11.9 Mn (INR 81 Cr). Existing investors SAIF Partners and impact investment firm LGT also participated in the latest funding round by Aye Finance.

Unitus Capital has been appointed as the financial advisor to the transaction.

Aye Finance will use the funding to further increase its loan book, which stands at about $77 Mn (INR 525 Cr) and in building its technology platforms.

“We are already a very well-organised technology platform, but we will use some portion of the proceeds to further upgrade it. We will be using a lot more of cloud platforms and integrate machine learning algorithms. We want to take it to the next level, which will include taking our processes on platforms, involving artificial intelligence,” said Sanjay Sharma, managing director of AYE Finance in a media statement.

So far, Aye Finance has raised a total of $37 Mn (INR 250 Cr). To be noted, this is effectively the second equity funding round raised by Aye Finance in the last six months.

• April 2018: Over $4.6 Mn (INR 30 Cr) in debt funding led by Swiss impact investor BlueOrchard Finance Ltd.
• February 2018: Over $3.8 Mn (INR 25 Cr) from three investors, including Hinduja Leyland Finance and IntelleGrow.
• January 2018: Over $6.28 Mn (INR 40 Cr) as a term loan from IFMR Capital.
• May 2017: Over $8 Mn from global impact investment manager BlueOrchard through NCDs (non-convertible debentures) with a maturity period of five years.
• March 2017: Credit facility of $ 3.1 Mn from SBI.
• November 2016: Over $10 Mn in a Series B round led by LGT IV,  SAIF Partners and Accion.
• December 2015: Series A round of $3 Mn.

Founded in 2014, Aye Finance is a new-age finance company that provides customer-centred financial services to the small and micro enterprises across India. As a Non-Banking Financial Company, the online lending company strives to make mortgage, hypothecation and term loan services accessible to the country’s underserved MSME sector. It was founded by Sanjay Sharma and Vikram Jetley. It claims to have disbursed $103 Mn (INR 700 Cr) across 60,000 loans since its inception.

“MSMEs are a major contributor to the Indian economy… However, they continue to lack access to formal credit. We were looking for a company which serves the large demand for credit for MSMEs. One of the challenges here is that you need to have a low cost of operations, given that these are small-ticket loans. Through the adoption of technology, AYE has been able to do that, and address a large portion of the Indian market,” said Kaushik Ghosh, India head of CapitalG.

Apart from Aye Finance, CapitalG has invested in five other Indian companies including FreshWorks, CommonFloor (acquired by Quikr), CarDekho, Practo and CueMath.