Indian lending startup SMEcorner raises $30m

Mumbai-based SMEcorner, a fintech startup that provides credit to small and medium enterprises (SMEs), said it has raised US$30 million in a series B round led by Indian private equity firm Paragon Partners, with participation from existing investors Quona Capital, Accion Venture Lab, as well as SMEcorner founder and CEO Samir Bhatia, among others.

Photo credit: Piqsels

The latest round, which was raised as a combination of equity and debt, saw Paragon Partners investing US$10.5 million, while the balance came from other investors, the company said in a statement. Last year in June, SMEcorner had raised series A+ round led by Quona Capital.

The startup plans to use the fresh funds to scale its business, forge partnerships, and expand in existing markets over the next financial year, with an aim to lend US$138.3 million (10 billion rupees) by the end of FY 2021.

“The additional capital will enable us to reach over 20,000 new customers and grow our distribution in the coming year,” Bhatia said in a statement. “We will continue to focus on building proprietary technology which will help us serve our customers more efficiently.”

Founded in 2014 by Bhatia and Sneha Shah, SMEcorner started as a financial lending firm, catering to the unorganized retail sector, primarily shopkeepers, in India. It obtained its NBFC (nonbanking financial company) license in February 2018 and is currently present across 15 cities in India.

The startup claims to have served over 8,000 unique customers and has disbursed over US$76 million (5.5 billion rupees) since obtaining the license. The company said it has about US$55 million (4 billion rupees) worth of assets under management.

SME lending is slowly catching up in India, and companies are either getting an NBFC license themselves or are partnering with a third party to enable lending for their clients. Recently, B2B ecommerce firm ShopX that works with retailers partnered with LoanTap to facilitate credit for its customer base.

SMEcorner competes with new companies as well as bigwigs like SoftBank and Alibaba-backed Paytm, Walmart-owned payment platform PhonePe, and Coatue Management-backed payment solution firm BharatPe. While lending to small retailers has become the focus area over the last two years for BharatPe, other fintech companies are steadily strengthening their focus towards this space.

“SMEcorner’s high-tech and touch model makes it uniquely positioned to facilitate credit to the highly underpenetrated micro and small enterprise segment,” Siddharth Parekh, co-founder and senior partner, Paragon Partners, said in a statement. “The asset-light model powered by several co-lending partnerships makes the business resilient from liquidity challenges and a highly granular loan book makes it resistant to any lumpy asset quality issues.”

This report was first published on KrAsia.