Bengaluru-based consumer lending startup Avail Finance has raised $9Mn in a fresh round of funding from Matrix Partners. With this funding, Avail Finance wants to become a complete online banking solution for blue collar workers by catering to a multitude of their financial needs such as savings, investments and insurance.
Commenting on the fundraise, Ankush Aggarwal, founder and CEO of Avail Finance said, “While we started with a pure-play lending product, we realised that the blue collar segment needs a more holistic financial platform. We believe that with our unique combination of customised products and focus on customer experience, we can work towards enabling true financial inclusion, while serving these customers profitably.”
Founded in 2017 by Aggarwal and Tushar Mehndiratta, Avail Finance is an online lending platform that provides short term loans to the blue collar workforce in India, including gig workers such as cab drivers and delivery boys. Only users earning less than INR 35K can avail a personal loan on the platform. Avail Finance allows personal loans upto INR 40K for a maximum tenure of eight months at a fixed interest rate of 2% per month.
The company also partners with companies such as Ola, Swiggy, Ecom Express, and Quess Corp, to offer salary advances to its employees. It also runs a financial literacy program to help users maintain a good financial health.
Earlier in 2018, Avail Finance had raised $17.2Mn in funding from Matrix Partners and a clutch of other investors including Bhavish Aggarwal and Ankit Bhati, Ola’s co-founders; Binny Bansal, co-founder & group CEO of Flipkart; Kunal Shah, founder of Freecharge; and Manish Patel, founder and CEO of Mswipe.
Lending To The Blue Collar Workforce
Digital lending is one of the fastest growing segments in the India’s fintech space. A BCG report has predicted the digital lending industry will touch $1 Tn mark in the next five years.
While most of these lending companies such as LazyPay, EarlySalary, and LoanTap cater to the needs of students and young professionals, startups such as Avail Finance are focused on bringing digital lending to the underserved segment of blue collar employees.
Blue collar workers have had a tougher time convincing the credit market about their creditworthiness. Here’s the scale for the problem: Twenty-four Mn households in India who fall in the elite and affluent income categories have access to up to 80% of all formal loans, amounting to $202 Bn in credit, whereas the 124 Mn households with an annual income between INR 1.4 Lakh to 4.5 Lakh, have only received credit worth $24 Bn, which is less than 10 percent of the total formal market.
Being left out from the formal credit market, blue-collar employees often have to take the erratic and risky informal approach, such as unorganised moneylenders, their employers, and other quasi-legal avenues.
Which is exactly where companies like consumer lending companies are trying to make an intervention. In this space, Avail Finance competes with startups such as Fozun RZ Capital-backed PerkFinance and Beenext’s portfolio Shubh Loans.