Low-key loans startup raises $75m in 2016’s largest fintech round yet

Illustration by Tech in Asia’s Andre Gunawan.

On Tuesday, an Indian fintech startup quietly announced that it has raised US$75 million in funding, reports Business Standard. That 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 US$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 US$22 million. Add to that Gaurav Dalmia, the chairman of Landmark Holdings, who has invested US$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 US$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.