Mumbai-based lending startup SMEcorner has raised $30 Mn in both debt and equity in Series B funding round led by Paragon Partners. Samir Bhatia, founder and CEO of SMEcorner also invested in the funding round, along with the company’s existing investors Quona Capital, Accion Venture Lab and some high net-worth individuals.
Bhatia said that Paragon Partners has invested close to $10.5 Mn in the company. SMEcorner plans to use this capital to expand its operations and reach out to over 20K new customers with total loan disbursement of INR 1,000 Cr by the end of financial year 2020, ending in March.
Prior to this, SMEcorner had raised $12.7 Mn in debt and equity from Quona Capital and Accion Venture Lab in March 2019. In June 2019, the company had raised $7 Mn from Capital First, Accion Venture Lab and a few high net worth individuals.
Founded in 2014 by Bhatia, SMEcorner offers quick business loans to micro, small and medium enterprises (MSME). SMEcorner received its non-banking financial company (NBFC) licence in February 2018.
The company aims to bridge the SME lending lap prevalent in the country. The lending startup offers loans to small businesses at an average rate of interest of 24% and the average ticket size of the loans disbursed are around INR 6.5 Lakh ($9,216). For this, SMEcorner relies on a proprietary online platform that combines machine learning, data science and artificial intelligence.
The company states that its customers mainly comprise of small merchants working across categories such as readymade garment stores, chemists, kirana stores, food outlets, and hardware stores.
SME Lending In India
As per DataLabs by Inc42 estimates, the total gross value added (GVA) of the Indian MSME sector is expected to be $866 Bn by the financial year 2020, ending March 31. The compound annual growth rate (CAGR) of the sector is expected to be 11.12%.
Whereas a report from the ministry of micro, small and medium enterprise published in the financial year 2018, highlighted that the MSME sector generated employment for more than 123 Mn workers in FY16. In 2016, the total GVA of the MSME sector was $568 Bn, which contributed 28.77% to the total GDP of India.
Besides SMEcorner, some other notable players in the SME lending sector are Aye Finance, KrazyBee, Buddy, SmartCoin, Onemi, Finomena, and Quicklo.
In November last year, Gurugram-based Aye Finance raised $17.3 Mn (INR 125 Cr) from Dutch entrepreneurial development bank, FMO, through non-convertible debentures. The company planned to use this funding to expand its presence in providing credit specifically for women-led micro-enterprises.