Low-key loans startup raises $75 million in 2016’s largest fintech round yet in India
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NEW DELHI, INDIA APRIL 9: Picture showing hands counting the currency notes of Indian one hundred rupee currency notes on April 9, 2009 in New Delhi, India. Photo credit: Raj Kumar/Mint via Getty Images Israel

NEW DELHI, INDIA APRIL 9: Picture showing hands counting the currency notes of Indian one hundred rupee currency notes on April 9, 2009 in New Delhi, India. Photo credit: Raj Kumar/Mint via Getty Images Israel

The startup, InCred, will conduct small and medium business loans, education loans, and mortgage loans, among other things

Tech in Asia

On Tuesday, an Indian fintech startup quietly announced that it has raised $75 million in funding, reports Business StandardThat makes it India’s biggest fintech round so far this year.

The startup, InCred, will conduct small and medium business loans, education loans, and mortgage loans, among other things. Its product is yet to launch – the website only says “something incredible is about to happen here” – but it’s hiring for several mid- to senior-level jobs on RecruiterBox.

There has been consistent buzz around InCred for the past few months. One big reason: Anshuman Jain. After Anshuman resigned as co-chief executive of Deutsche Bank, everyone was curious about his next move. In May, the Economic Times reported on rumors that he was partnering with his former colleague Bhupinder Singh to start a company in India.

InCred can target new parts of the population that banks are struggling to work with.

This latest announcement has confirmed some of those rumors. Anshuman has invested $7.5 million in the startup and will be joining its board. Other big names include Ranjan R. Pai, who is the managing director and CEO of Manipal Group.

Bhupinder, who heads the company, has also put in his own investment of $22 million. Add to that Gaurav Dalmia, the chairman of Landmark Holdings, who has invested $7.5 million, private equity money from IDFC Bank, Alpha Capital, and others, and you have a stacked team of financial experts with huge networks.

InCred has also roped in Prashant Bhonsle to head its education vertical. Prashant was the former country head of Credila, an education lender. Anshuman himself joined online lender SoFi as an advisor after leaving Deutsche Bank. SoFi is best known for lending to students, but also conducts loans for mortgages and other personal reasons.

It also acquired InstaPaisa, a lending platform that connects individuals to institutional investors – like banks, insurance companies, and hedge funds. InstaPaisa CEO Nikhil Sama will be joining the team.

Opportunity is big

Besides the star-studded board, there’s another reason for all of the excitement. InCred is an NBFC (a non-banking finance company). These are the only entities outside of banks that have gotten the RBI’s (the Indian central bank, or the Reserve Bank of India) approval to lend money.

Right now, Indian banks are facing immense pressure from unpaid loans – between 2013 and 2015, the number of unpaid loans rose by a massive 60 percent. In March 2015, the total amount of loans that were considered unrecoverable was $7.8 billion.

InCred will loan differently depending on each vertical, Bhupinder explained to Business Standard. Loans for education will parse a student’s background, including grades and the field they’ve chosen to major in, for example.

Data on India’s small and medium businesses is woefully limited, but most sources place the number of SMBs at close to 1.5 million. They’re all micro-entrepreneurs and looking to expand, so lending to them is a massive opportunity.

Startups like InCred can target new parts of the population that banks are struggling to work with. It’s easier to get a loan from them – and often cheaper – than it is from a bank.

The other highest funded fintech startups in India so far this year are e-wallet Mobikwik, which raised $50 million, and peer-to-peer lender Faircent, which raised $32 million. Unlike InCred, Faircent connects individuals and companies that want to lend to investors on its marketplace.

Paytm, which has raised a total of $585 million, is an e-wallet that runs its own e-commerce site. It’s received a payment bank license from the RBI, which allows a customer to store up to $1,500 on its e-wallet at a time.

Another startup in this club is Capital Float, which has raised a total of $41 million across four rounds. Its investors include SAIF Capital and Sequoia. It made news with its $25 million round in May.

Because of limited data, lending to small and medium businesses and other individuals is a dangerous task – one that will require financial know-how and a good amount of working capital. That seems to be the strategy that InCred is focusing on.

Converted from Indian Rupees. Rate: US$1 = INR67.07.

Editing by Michael Tegos and Steven Millward

This post was originally published on Tech in Asia

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Meghna Rao

About Meghna Rao


Born in New York and working in India, Meghna loves innovation, writing and different types of okra-based dishes. She also suffers from an irrational fear of writing too much about herself online. “What if something changes?,” she asks. “I can’t have the Internet documenting my every move.”

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