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Bangalore-based peer to peer lending marketplace startup, Loanzen, has raised an undisclosed amount of seed funding from Tracxn Labs, and angel investors, through Tracxn Syndicate.
The round also saw participation from Rajan Navani, Harvard Angels – Abhishek Gupta and Vinay Gupta; Praful Thachery, Ashish Taneja (MD at growX ventures), Mahesh Parasuraman (co-founder & partner at Amicus Capital Partners), Suresh Bala (SVP at GIC, Govt of Singapore investment fund), among others.
Loanzen was founded in September 2015, but officially it launched operations in January 2016. It was founded by Madhu Sudhan, Ritesh Kadmawala and Venkatesh Sankararaman.
According to a study by World Bank’s investment arm IFC, in conjunction with SIDBI and RBI data, the market size for unsecured short-term loans is $120 Bn. Leveraging the opportunity, Loanzen is helping businesses, that have been in operation for less than three years, or do not have collateral, meet short term cash-flow gaps, by offering them short tenure loans for up to 120 days.
The newly raised capital will be used to build engineering team, which works with varied data sources, and for building the data science team, which models the data to predict borrowers’ probability of default.
Talking about the investment, Neha Singh, of Tracxn, said, “Loanzen is addressing an important gap, in the lending ecosystem, as it empowers the small and medium businesses to access hassle-free short term credit.”
How Do Businesses Benefit?
Loanzen provides a platform for lenders, by using technology and data, to score credit applications in real-time using a variety of data sources, like banking, accounting, public data, social data, etc. The lenders lend to companies based on this credit scoring model, thereby saving on costs and effort of finding borrowers, evaluating and credit scoring them.
On the other side, the borrowers can apply through a web-based application process in two steps-
- Provide their business, social, and financial information for onboarding
- Post invoices to access loans against invoices.
Based on the information provided, LoanZen arrives at a credit score after which a term sheet is issued to the borrower outlining loan terms.
The company currently works with businesses across sectors including staffing services, equipment providers to hospitals, software services firms, ad agencies, manufacturing companies, and sellers on ecommerce portals. Loanzen currently lends in Bangalore, and plans to expand to Mumbai and Chennai by April 2016. The startup expects to be able to lend in all metros and tier-1 cities by June. It is also partnering with several distribution chains that give it access to small businesses that are part of the value chain of large corporates.
Tracxn Syndicate is a fundraising platform of Tracxn Technologies Pvt. Ltd. Launched in June 2015, it helps budding entrepreneurs accelerate. A few startups that have recently raised funding from Tracxn Syndicate are Hansel.io, Tavaga, WishUp, Parcelled, and Stayglad.
Earlier this month, Tracxn had raised an undisclosed amount of funding from a group of angel investors including Nandan Nilekani, Mohandas Pai, WhatsApp vice-president Neeraj Arora, and Junglee co-founder Anand Rajaraman, among others.
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