Delhi-based fintech startup LivFin has raised INR 35 Cr from German development finance institution DEG, which is a subsidiary of KfW Group. Last year, it raised $5 Mn from DEG.
LivFin and DEG signed an investment agreement last year, the company said in a statement.
With the fresh capital, the company plans to strengthen the supply chain finance segment as well as expand its reach to the un-banked and under-banked segments of the SME eco-system of the country.
Founded in 2017, LivFin is a non-banking financial company which grants small business loans, supply chain finance and working capital loans to small and medium enterprises (SMEs) in India.
The startup also offers collateral-free credit to small business owners who work with mid-sized corporates. These corporates, which act as either suppliers or as distributors for finished products of SMEs, act as anchors for these small businesses.
“The equity investment of DEG underlines the resilience of our business model. The equity infusion also signals the emergence of supply chain finance as a potent financial sector investment option for investors. After weathering the pandemic impact, we are now well-positioned to accelerate our efforts to address credit-under penetration in the MSME sector with our customized and differentiated offerings,” said Rakesh Malhotra, founder, LivFin.
The company claims to have developed a loan book of INR 175 Cr and cumulatively disbursed over INR 1,500 Cr till date. So far, LivFin has secured funding from nine lenders totalling $14 Mn. Its competitors include KredX, LenDenClub, Loanzen, KountMoney, Faircent.com, LoanCircle, Capzest.
“Especially over the last months, it has been impressive to see how digitally-enabled models with minimal physical touchpoints and advanced data-insights are paving the future of SME lending. LivFin’s approach to supply chain finance falls exactly in this category and we are convinced that it has the potential to catalyze the advancement of the Indian SME sector,” said Dr. Felix Schneider, DEG Vice President FinTechs Global Markets
According to the Global Fintech Report Q1 2019, more than one million borrowers and two million lenders have transacted with lending platforms, with the overall exposure remaining at INR 350 Cr. Further, between 2015 and Q1 2019, the total investment in Indian fintech startups was $7.62 Bn, out of which 25.49% ($1.94 Bn) was for lending tech startups, as per Inc42 Plus.
India’s digital lending market has the potential to become a $1 Tn (INR 71 Lakh Cr) opportunity in the next five years, according to a 2018 BCG report. Of this, personal lending is estimated to grow to a $50 Bn market, growing at a rate of 30% every year.