Aye Finance Raises $10 Mn Series B Funding; Targets $293 Mn Loan Portfolio  By 2021

Delhi-based NBFC Aye Finance has raised $10.2 Mn (INR 70 Cr) in Series B round of funding led by LGT Impact Ventures. Existing investors SAIF Partners, and Accion also participated in the round.

The raised funds will be used for expanding to more cities in India and technology innovation. Earlier, in December 2015, the company had raised Series A round of $3 Mn and in February 2015, Seed round of $1 Mn.

Aye Finance was founded in 2014 by Sanjay Sharma and Vikram Jetley. It provides customer centred financial services to micro & small businesses. Through use of technology, credit assessments and a new ‘Industry Cluster Enablement’ (ICE) model of lending, the startup helps MSMEs meet working capital and capex requirements as they look to grow their businesses.  (Capex is money invested by a company to acquire or upgrade fixed, physical, non-consumable assets, such as buildings and equipment or a new business.)

It assesses ‘thin-file’ customers using an insightful underwriting approach. Its ‘industry cluster’ approach allows the startup to develop thorough expertise in particular micro-industries and  better understand what a prospective borrower’s financials should be, assess their creditworthiness, and evaluate their reputation.

It currently provides loans between $732 (INR 50K) and $36.6K (INR 25 Lakhs) to support the  working capital needs of MSME’s and has 31 branches in seven states in north and south India.

With 400 employees, the startup has claimed to lend money to 10,000 MSME’s so far with an average loan amount of  INR 1 Lakh for a duration of 12 to 18 months, at an annualised rate of interest of 22% to 28%.

It further aims to launch 30 more branches across states like Uttar Pradesh, Rajasthan, Andhra Pradesh, Gujarat, and Maharashtra by December 2017 and targets a loan portfolio of more than $293 Mn (INR 2,000 Cr) over the next five years.

Recently, Ahmedabad-based GVFL Limited has launched INR 600 Cr MSME Fund, known as Value Multiplier Fund to focus on technology startups and non-technology MSMEs in the early-growth stage. Then there is Chennai-based fintech startup, Veritas Finance, mainly catering to the working capital and business credit requirements of the small businesses in the MSME sector. Lendingkart and KredX are other startups in this space.