Aye Finance raises $ 10.3 million to provide micro-loans to small businesses in India – TechCrunch


Aye Finance, a micro-lending startup in India, has landed $ 10.3 million in new funding led by LGT and existing investors SAIF Partners and Accion.

The two-year-old company provides finance to small businesses across India that otherwise would not appear on the radar of traditional banks and finance institutions. Founders Sanjay Sharma and Vikram Jetley are former bankers who returned to India with the intention of starting a “social impact” project.

Sharma told TechCrunch in an interview that typical loans are in the size of 200,000 to 300,000 INR ($ 2,900 to $ 4,400) and are intended for businesses and business owners who are unable to raise funds. capital through the usual channels. This doesn’t only mean that Aye Finance is going below the level of banks and credit companies, it is also targeting clients who he said are under the radar of e-commerce companies like Flipkart, which offer floats to help micro-entrepreneurs earn a living. on their platform.

“How do you subscribe [a business owner] when they don’t have the documents that traditional financial companies are used to seeing, when they don’t keep tax returns or books? Sharma said of the challenge.

To meet this challenge, Aye Finance operates a network of 31 small but staffed branches in seven states, primarily in northern India, where potential clients meet with a representative who completes their financial information using a digital platform that synchronizes with the cloud. Because these are outliers, Aye Finance specializes in what Sharm calls “industrial clusters” – specific types of industries – which, he said, allow them to generate precise metrics for. evaluate a business. In the case of shoe manufacturing, it could be the number of units produced per day per employee, or other financial data outside of what banks usually look for.

“We understand the dynamics of each industry and use eight metrics to do it,” he explained.

The company uses a local and offline approach to find prospects, as most do not already know how to use the Internet.

“Clusters tend to be densely popular in particular geographies,” Sharma added. “There can be 15,000 prospects in an area of ​​2 km² – we only need 1,000 (registered) customers to set up a branch.”

The company said it is currently in month-to-month breakeven, but plans to become broadly profitable before the end of 2017. Sharma is also aiming for the next round of funding in 18-24 months. , which would help society. switch to different types of financing products for businesses.

“We [hope to] offer them financial services in connection with their cluster. For example, for some there are big buyers in Delhi that they can be introduced to, we can create a market for them, to offer advisory and market aggregation services, ”Sharma explained.

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