SarvaGram Raises INR 77 Cr Series B To Tap Rural Lending Opportunity

Rural lending startup SarvaGram has raised INR 77 Cr in a Series B funding round led by Elevation Capital. The round also saw participation from existing investor Elevar Equity, a social impact private equity investor, which had earlier led the company’s seed round worth INR 25 Cr. The two companies together hold more than 50% stake in Sarvagram. 

Founded by banking industry veterans Utpal Isser and Sameer Mishra in 2018, SarvaGram targets improving credit access to underserved households based in rural and semi-urban India. The company looks at households in need of loans for various purposes. SarvaGram’s credit products include loans for small businesses, farmers, housing, personal and gold. 

As only a third of the income of rural households comes from farming, Isser told TOI that SarvaGram is looking at lending outside the sectoral verticals like agriculture, salaried or self-employed, by assessing borrowers at household levels. The company is present in Gujarat and Maharashtra and will soon expand to Rajasthan and Karnataka too. By the middle of next year, SarvaGram plans to have 50 branches countrywide for an omnichannel approach. 

SarvaGram is among the several lending tech startups in India looking to solve the credit needs of businesses and individuals in Tier 2 and 3 cities as well as the rural areas in the country. This segment of the population has long been underserved by the traditional banking institutions. 

In 2020, fintech was the top startup sector in terms of the funding amount ($2.1 Bn) and deal count (131) in 2020, putting it among the top startup sectors that hugely benefited from the Covid-impacted market conditions. Besides SarvaGram, the likes of Lendingkart, ZestMoney, Neogrowth, Indifi, UGro, Aye Finance, Incred among others are looking to tap the B2B digital lending opportunity through various models. Besides the omnichannel approach which involves retail market presence, Lendingkart and others are also exploring colending models by partnering more closely with banks.  

Among the four main fintech subsectors — payments, lending tech, insurance tech and investment tech — insurance tech (58%), investment tech (53%) and lending tech (44%) recorded the highest CAGR in 2015-2020 in terms of total funding. In contrast, digital payments recorded a negative growth rate (-32%), indicating diminishing investor confidence towards this sub-sector due to market saturation caused by established players.

In terms of deal count, lending tech startups had the highest share for four consecutive years, from 2017 to 2020. The average annual contribution of lending tech during this period was 50%.