Micro, Small and Medium Enterprises (MSME) sector has become a big priority sector in not only in the Indian economy but also in the Indian startup ecosystem. Besides the impetus from the government’s ‘ Startup Indian, Standup India’ plan, it is also witnessing interest from many startups who are trying to solve the problem of working capital for SMEs in their own ways.
For instance Ahmedabad-based GVFL Limited has launched INR 600 Cr. MSME Fund, known as Value Multiplier Fund to focus on the technology startups and non-technology MSMEs in the early-growth stage. Then there is Chennai-based fintech startup, Veritas Finance, mainly catering to the working capital and business credit requirements of the small businesses in the MSME sector. There are many others working on similar models such as such as Aye Finance and Lendingkart.
However, the fact remains that SME sector still faces a cash crunch MSMEs often struggle to keep their cash flow intact and can hardly withstand the burden of late payments. They are always in dire need for working capital to sustain continued growth and production. It is this problem that the Bangalore-based KredX, an invoice-discounting platform founded by IIT & Stanford alumni Manish Kumar, Anurag Jain & Puneet Agarwal in 2015, aims to solve.
Today, it has raised $750k in funding from Bangalore-based seed stage investor Prime Venture partners.
Says Manish, “For SMEs who supply to blue chip companies, it normally takes about 60-90 days to get their invoices credited. During that time when cash is locked, SMEs normally have to resort to banks for working capital requirements without realising that the invoice itself is an underutilised financial instrument. On the other hand are individual financiers who are looking to earn above-average financial returns aims to solve. Hence KredX connects the credit-worthy MSMEs looking to raise working capital (against their unpaid invoices) to these individual financiers, thereby enabling instant access to cash for SMEs.”