SUMMARY
Chinese venture fund Shunwei Capital led the round along with participation from existing seed investors India Quotient and Mayfield
Upwards Fintech is targeting a loan book of $13.7 Mn (INR 100 Cr) for next year
The startup recently initiated a pilot project to take its platform to Tier II and Tier III markets
Mumbai-based fintech startup Upwards Fintech has raised $5 Mn in a Series A round of funding led by Chinese venture fund Shunwei Capital. The round also witnessed participation from the startup’s existing seed investors, including Mumbai-based India Quotient and Mayfield.
Upwards Fintech plans to utilise the raised funds to strengthen its technology and data science capabilities and to expand to more cities.
Founded in 2017 by Nimesh Verma and Abhishek Soni, Upwards Fintech provides quick loans through its desktop website and a mobile application to salaried individuals. The platform aggregates user data from different mediums and utilises over 500 data points to come up with a reliable credit report, the startup said in a statement.
To Inc42‘s query on whether the platform takes into account the CIBIL score as a criterion to approve loans, Soni replied: “We do check the credit history of a potential borrower, but that is not the only criteria. In fact, we have a proportion of our borrower base in the score range of 580-640 where conventional lenders have been very hesitant to lend, but our proprietary underwriting algorithms allow us to serve the segment and yet maintain healthy portfolio quality.”
The startup is present in all key Tier I and Tier II cities such as Mumbai, Delhi, Bengaluru, Hyderabad, Chennai, Jaipur, Pune, Indore, Bhopal, Coimbatore, and more.
Madhukar Sinha, Founding Partner at India Quotient (IQ), said, “Having seen the micro-finance boom in India first-hand, I am very excited by the large market opportunity Upwards is targeting. IQ came in at the seed-stage in Upwards, and we are very impressed by the team and its capability to build a product for the next billion.”
According to Soni, conventional underwriting and loan offerings can’t serve the needs of India’s emerging middle class. “We have invested heavily in building advanced data science-driven underwriting algorithms to address this gap,” the co-founder claimed.
Soni emphasised that 40% of the credit demand comes from smaller towns. The startup is in a pilot mode for penetration in Tier 2 and Tier 3 markets.
Upwards Fintech is targeting a loan book of $13.7 Mn (INR 100 Cr) for the next year. The startup claims to have disbursed loans worth $549 K (INR 4 Cr) since November last year. It also claims to have received 4K applications and have an active user base of 250K. Upwards Fintech charges a processing fee of 2% on the loan amount and levies an interest rate of 18-32%.
The startup disburses loans through Bajrang Investments, a non-banking financial institution. It claims that it has non-performing assets of less than 1%.
Indian Online Lending Space On Fire
Fintech as a sector in India is growing at a rapid speed. Demonetisation and the central government’s push for a digital economy have given an impetus to Indian fintech startups and, apart from digital payments, online lending is a space that’s on fire. The Indian fintech sector has attracted global investor interest as well.
Recently, online lending startup Aye Finance raised its 10th debt financing round by issuing non-convertible debentures. The funding round was led by global impact investment managers Triple Jump BV and MicroVest Funds. The deal was executed by Northern Arc Capital (formerly IFMR Capital).
Prior to this, Delhi-based StashFin partnered with non-banking finance company DMI Finance to raise $4.3 Mn (INR 30 Cr) for onward lending through its online platform. The fundraise was aimed to augment its portfolio to meet the growing needs of its customers.
Upwards Fintech competes with other major players in the online lending space including Veritas Finance, Lendingkart, Capital Float, Quikrupee, SMEcorner, Innoviti, Biz2credit, FlexiLoans, and KredX, among others.
According to a Statista report, the total transaction value in the alternative lending segment of India amounts to $241 Mn in 2018. Also, the total transaction value is expected to show an annual growth rate (CAGR 2018-2022) of 53.3% resulting in a total amount of $1,332.2 Mn by 2022.
