October 14, 2024

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International investors raise $34.5m for digital finance firm serving Indian MSMEs

International investors raise .5m for digital finance firm serving Indian MSMEs

Accion and Nuveen are among backers for FlexiLoans, which is helping to support millions of India’s small businesses currently excluded from the mainstream financial system.

International investors raise .5m for digital finance firm serving Indian MSMEs
FlexiLoans seeks to improve access to financial resources for millions of micro and small-scale entrepreneurs in India who are excluded from traditional lending | Tejj on Unsplash

A group of US, European and Indian-based impact investors have supported a $34.5m (€31m) series C equity round for India’s Flexiloans, which lends to the country’s small businesses via a digital platform.

The round was led by US non-profit Accion, global investment manager Nuveen, Indian tech-focused venture capital firm Fundamentum, and Maj Invest, a Danish asset manager. Maj Invest also led a $90m series B capital raise for the company in 2022. Unitus Capital advised on the series C round.

Founded in 2016 by Deepak Jain, Ritesh Jain and Manish Lunia, FlexiLoans seeks to improve access to financial resources for millions of micro and small-scale entrepreneurs who are excluded from traditional lending, because they lack a conventional credit history. 

Its platform allows micro- small- and medium-sized enterprises (MSMEs) across the country’s tier 2 and 3 cities – all bar India’s very largest cities – to receive loan approvals in as little as two days. This is achieved by accessing data from e-commerce and payment platforms with which it has created partnerships and then running the data through the company’s proprietary credit underwriting software, which is underpinned by machine learning. 

The resulting information allows the company to improve its ability to underwrite risk, helping to keep its credit cost low compared to the industry average. Funding for loans is provided via FlexiLoans’ own non-bank financial company as well as from various lending partners. FlexiLoans has disbursed over $833m in loans across more than 2,100 towns and cities to date and has more than $238m of assets under management.

Expanding operations

The company plans to use the capital injection to expand its operations, improve its products and fortify its technological infrastructure.

Radhika Shroff, managing director, impact investing private equity at Nuveen, said FlexiLoans offered valuable support in a country where more than 60 million small businesses were in need of working capital.

“FlexiLoans provides a commercial and proven solution by offering small businesses a differentiated digital delivery and underwriting model to scale financial inclusion to underserved tier 2 and tier 3 cities,” he said.

Nethra Bhat, partner, Asia, Accion Digital Transformation, said: “FlexiLoans is connecting MSMEs across India to working capital so they can better serve their customers. They understand the Indian digital MSME space and their customer’s needs, and have a strong tech platform.” 

Co-founder Deepak Jain said the company was pleased to have secured investment from global private equity funds who shared its ambition to empower MSMEs across India.

“With this capital, we will further our mission of driving financial inclusion, expanding our reach, enabling more underserved MSME businesses to access the funds they need to grow and succeed”, he said.

Accion  is among investors that have been strengthening support for the digital transition in Asia and emerging markets recently, launching a $152.5m fund in May to support the digital transition of companies serving MSMEs across South and Southeast Asia, Latin America, and Africa. 

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