Happy Loans Raises $20 Mn To Strengthen Its Micro Enterprise Loan Offering

Mumbai-based digital lending startup Happy Loans has raised $20 Mn in an equity and debt funding round. The funding round includes a mix of equity from Indian and US strategic investors, and financing lines from institutions including DMI Finance.

The funds will be used to improve customer experience, Happy Loans claims. It will also invest in strengthening the back-end capabilities to improve its evaluation of customers and determine their creditworthiness.

Founded in 2016 by Manish Khera, Gautam Ivatury and Shweta Aprameya, Happy Loans offers working capital loans to micro enterprises. It caters to merchants who have less than five employees and extend short-term loans between INR 1 lakh to INR 10 lakh. The company charges an interest rate of 2% per month.

In its first two years of operations, Happy has disbursed over $20 million (INR 140 crore) through over 32,000 loans to more than 80 different kinds of businesses. It offers 30-90 days loans and also introduced a new category of weekend loans. At present, the startup claims to have less than 5% non-performing asset level, according to an ET report.

Digital Lending In India

Inc42 in its Annual Tech Startup Funding report 2018 noted that fintech startups raised $1.4 Bn across 121 deals in the year with top-five funding grossers being PolicyBazaar, Pine Labs, LendingKart, PhonePe and ClearTax.

Further, Inc42 DataLabs noted that lending tech is gaining ground and became the third most significant sector in terms of funding.

According to a joint study by Omidyar Network and Boston Consulting Group (BCG), digital lending to micro, small and medium enterprises (MSME) in India can grow upto $100 bBn by 2023, a 15x increase in annual disbursements.

Here are a few recent fundings in the digital lending sector:

• April 2019: Mumbai-based digital lending startup InCred closed its Series A round at $85.89 Mn (INR 600 Cr). The funding round was led by Dutch development finance institution FMO with participation from US-based asset manager Moore Capital, India/Latin America-focused PE fund Elevar, and Alpha Capital.
• April 2019: Bengaluru-based digital lending startup ZestMoney raised $20 Mnin a fresh funding round led by Washington DC-headquartered fintech investor Quona Capital
• April 2019: Bengaluru-based full-stack consumer lending company Credy raised an undisclosed amount in a Pre-Series A round of funding.
• January 2019: Pune-based online lending startup LoanTap raised $8 Mn (INR 57.9 Cr) from a combination of debt and equity for its fifth funding round which was led by early stage venture capital fund 3one4 Capital.
• January 2019: Fintech lending company Aye Finance raised $10 Mn (INR 71.32 Cr) in a debt funding round from global impact investment manager, responsAbility and Northern Arc, through the issuance of non-convertible debentures

As of now, Happy Loans is looking to open credit facility to a market of 600 Mn people in India. As it expands its horizons and utilises funding to strengthen its presence, the fintech market continues to be ripe with consumer and investor attention.