Sequoia India leads $55m series C round in lending platform Finova Capital

Finova Capital, a non-banking financial company (NBFC) based in India, announced that it has raised US$35 million in a series C round from Sequoia Capital India and Faering Capital, as well as an additional US$20 million from various other lenders.

(From left) Finova co-founders Mohit Sahney and Sunita Sahney / Photo credit: Mohit Sahney

Launched in 2016 by Mohit Sahney and Sunita Sahney, Finova targets micro-entrepreneurs and semi-skilled professionals who do not have or have limited access to lending from formal financing institutions. The startup looks to provide these segments with business loans of around 300,000 rupee to 500,000 rupee (US$4,052 to US$6,753) for a period of up to seven years.

The company said it currently has around 4.6 billion rupee (US$62.1 million) of assets under management and 11,000 customers. It also claimed that it has been profitable from the beginning.

With over 100 branches across states like Rajasthan, Madhya Pradesh, Uttar Pradesh, and Delhi, Finova plans to use the new funds to expand its presence and enable access to credit for the country’s unbanked population.

“The current credit gap for MSMEs (micro, small, and medium-sized enterprises) in India is estimated at US$380 billion,” said Ishaan Mittal, principal at Sequoia Capital India. Finova is trying to bridge this gap, he added.

NBFCs function under the banking regulations of the Reserve Bank of India to provide banking services like loans, money market investments, as well as monetary advice like chit-reserves (a type of rotating savings and credit association system practiced in India) and advances.

In 2018, the company raised US$6 million in a series A round from Sequoia Capital India, followed by a US$15 million series B funding from Faering Capital and Sequoia Capital.

Currency converted from Indian rupee to US dollar: US$1 = 74.05 rupee.