Lendingtech Startup Aye Finance Raises $10 Mn To Offer Loans To Microenterprises

Gurugram-based B2B lendingtech startup Aye Finance has secured $10 Mn (INR 81.2 Cr) in external commercial borrowings (ECB) from Switzerland-based responsAbility Investments.

According to the startup, Aye Finance will use the incoming funds to offer business loans to microenterprises to support their growth.

Aye Finance has raised more than INR 550 Cr of debt in the last three months, with notable infusions coming from BlueOrchard (INR 87 Cr), Triple Jump BV and Northern Arc (INR 75 Cr) and Symbiotics (INR 65 Cr).

Founded in 2014 by Sanjay Sharma and Vikram Jetley, Aye Finance offers affordable business loans to microenterprises in the country.

It uses a technology called cluster-based credit assessment with AI algorithms to make risk assessments in the absence of traditional business documents.

The lendingtech startup is backed by CapitalG, Elevation Capital, Light Rock, Alpha Wave, A91 Partners and MAJ Invest and claims to have disbursed more than 4.6 Lakh loans worth INR 6,000 Cr through its branch network in 311 locations across 21 states.

The lendingtech startup competes with ftcash, ARTH, FlexiLoans, Lendingkart, LenDenClub and Kinara Capital in this segment.

Commenting on the fundraise, Sharma, who is also the MD of Aye Finance, said, “The support we are receiving from global impact leaders like responsAbility allows us to continue in our mission of transforming microenterprise lending in India by providing entrepreneurs customized business loans at affordable prices.”

Rudrashis Roy, investment officer at responsAbility, said, “For over five years now, Aye Finance has been a trusted partner in our endeavour to bridge the credit gap in the microenterprise sector via private capital funding. We are once again delighted to collaborate with Aye to support the growth of small, resilient businesses post a difficult couple of years.”

Only 1 in 10,000 microenterprises in India have access to formal credit, even though microenterprises represent nearly 30% of India’s GDP. India’s current addressable credit gap to MSMEs stands at $380 Bn, according to estimates by the World Health Organisation (WHO) and the Association of Chartered Certified Accountants (ACCA).

Even so, according to Inc42’s ‘State Of Indian Fintech Report, Q3 2022’, loans worth $128 Bn were disbursed to Indian SMBs in FY21, with a 40% year-on-year (YoY) surge in loan disbursals.

According to an Inc42 report, fintech is set to become a $1.3 Tn market opportunity by 2025. Lendingtech is said to be the single largest opportunity in the fintech segment, representing 47% or $616 Bn of the total fintech market by 2025.