SUMMARY
The equity capital raise was led by Michael & Susan Dell Foundation, while debt was offered by Blacksoil, Caspian Debt, RevX Capital, and Westen Capital
Founded in 2016, the Hyderabad-based fintech startup aims to bridge the credit gap for MSMEs in Tier III and IV towns
The startup is targeting an AUM of INR 2,000 Cr over the next three years
Fintech startup CredRight has secured INR 78 Cr ($9.7 Mn) in a combination of equity and debt funding.
The equity capital raise was led by Michael & Susan Dell Foundation with participation from other investors including YourNest, Spearhead Capital, 9Unicorns and AccionVenture Lab. While the debt part of the funding has been provided by Blacksoil, Caspian Debt, RevX Capital, and Westen Capital.
Founded in 2016, by Neeraj Bansal and Vineet Jawa, the Hyderabad-based fintech startup aims to bridge the credit gap for Micro, Small and Medium Enterprises (MSMEs) in Tier III and IV towns.
The startup will use the funding to expand further into new locations and strengthen its technology stack.
Speaking on the fundraise, cofounder Bansal said, “We have served more than 5,000 nano enterprises, and this fundraise will help us expand our reach exponentially. Our phygital model, unique underwriting ability & deep understanding of nano enterprises helps us reach remote areas and provide meaningful loans whilst ensuring profitability.”
According to the Reserve Bank of India (RBI), only 10% of the MSMEs currently have access to formal finance. This is compounded by the limited ability of commercial banks and traditional lending institutions to extend their services to remote locations.
CredRight steps in to fill this void, connecting these lenders with small business owners, thereby circumventing the need for them to rely on opaque and high-interest money lenders.
According to the company, in India, there is a staggering credit demand shortfall estimated at $500 Bn from approximately 63 Mn MSMEs, and this shortfall continues to grow each year.
The startup claims that it has experienced a 10x growth in its assets under management (AUM) over the past three years. It is further targeting an AUM of INR 2,000 Cr over the next three years.
The funding comes after the Indian fintech space witnessed a 57% Y-o-Y decline in the number of deals from the corresponding quarter of last year. According to Inc42’s State Of The Indian Fintech Report Q2 2023, the Indian fintech market size is expected to reach $2.1 Tn by 2030, growing at 18% CAGR.
Other fintech startups offering debt financing to MSMEs and small businesses include — Indifi, Lendingkart, U GRO among others.
