Microlending Startup SMECorner Raises $7 Mn Funding From Capital First, Others

Mumbai-based online microlending startup SMECorner has raised around $7 Mn from Capital First, existing investor Accion Venture Lab, and a clutch of high net worth individuals.

According to reports, the capital is a mix of equity and debt with $3.66Mn (INR 25 Cr) in debt and $3.3 Mn (INR 22.5 Cr) in equity.

Capital First will own a 14.2% stake in SMECorner post this investment; it has invested the entire debt portion and $1.76 Mn (INR 12 Cr) in equity.

SMECorner plans to use the funding to scale its loan book by expanding on its offline branches and honing its technology platform. “We want to grow our loan book to about $58.7 Mn (INR 400 Cr) by the end of FY19 and to $220- $293.84 Mn (INR 1,500-2,000 Cr) by FY20. This partnership will help us achieve that scale even as we are in talks with a few B2B platforms to enable loans for their participant vendors thus helping us scale our customer base too,” Samir Bhatia, founder and CEO, SMECorner said.

It has also entered into a strategic arrangement wherein the loans originated by the company will be booked on Capital First’s books with a risk-share agreement in place. SMECorner will get a service fee for the loans.

Bhatia further aims to expand the client base to 5,000 by FY18 end and have a loan book of $733.65 Mn (INR 5,000 Cr) in three years. The startup will also use a part of the funding to improve its creditworthiness analysis technology tools, including the Optical Character Recognition (OCR) tool which analyses data on paper and crunches cash flows immediately.

Further, as part of this investment round, SMECorner will also enable sharing of its technology tools, for which it has applied for a patent, with Capital First.

Founded in 2014, SMECorner offers quick access to business loans to micro, small and medium enterprises (MSME). The startup shifted from a marketplace model to an NBFC, having received its licence in February this year. It offers loans to small businesses at interest rates of 19-26% depending on the size of loans, at an average size of $8,803 (INR 6 lakh).

At present, it claims to have about 700 customers on its books. It offers loans to small businesses across retail, manufacturing, and trade, including wholesale and B2B, and has lent $6.6 Mn (INR 45 Cr) so far.

MicroLending In India

In the microlending space, SMECorner competes with players like KrazyBee, Buddy, SmartCoin, Onemi, Finomena, and Quicklo. Other startups in the lending space are Cash Suvidha, Creditas, etc, which also recently raised funds.

Most recently, SAIF Partners and Sequoia India-backed online lending platform Capital Float raised $22 Mn from Amazon Inc in a follow-on Series C funding round of $22 Mn.

Recently, Delhi-based online lending platform Cash Suvidha raised $1 Mn in a Pre-Series A funding round from Initia Holdings; Vipin Agarwal, a partner in India Industrial Growth Fund, and others.

Prior to this, in February, Ahmedabad-based SME lending platform Lendingkart secured over $87 Mn in an equity funding round as part of its Series C round.

According to the Inc42 DataLabs Indian Startup Funding report 2017, the Indian fintech industry received $3.01 Bn across 111 deals in 2017. The rising investor interest in the online lending domain comes on the back of increasing opportunities in the Indian fintech and lending segment.

The sector continued to lead its growth — according to the Indian Tech Startup Funding Q1 2018 report, fintech witnessed the highest funding among sectors.

A NASSCOM report earlier forecast that the Indian fintech software market will touch $2.4 Bn by 2020, from the current $1.2 Bn.

[The development was reported by ET.]