Will ally with banks, investors.
By Raif Karerat
WASHINGTON, DC: Capital Float, a financial tech startup from India that wants to make loans more accessible to small businesses, has raised a $13 million Series A with SAIF Partners, Sequoia Capital, and existing investor Aspada at the forefront of the investment group.
Based out of Bengaluru, with offices in New Delhi and Mumbai, Capital Float has raised over $17 million to date, all within the past year.
Aside from using the Series A to expand its reach to additional cities, upgrading its technological infrastructure, and launching new products, the company will also use its new equity to finance loans, according to TechCrunch. However, it plans to create further capital by allying with banks and individual investors.
Capital Float generates its revenue from a combination of interest and flat fees attached to its services.
To date, Capital Flat has loaned over $6 million to small business throughout 12 cities in India. Its growth is largely due to India’s rapidly swelling e-commerce sector, which The Economic Times reports will explode from $10 billion in 2014 to $43 billion by the end of the decade. Seventy percent of the applicants for loans through Capital Float are retailers who operate via online marketplaces such as Amazon India, Snapdeal, Flipkart, and Myntra.
While the online commerce community currently provides the lion’s share of Capital One’s clients, the startup also intends to launch products designed to meet the needs of brick-and-mortar businesses, such as small manufacturers and trade service providers.
In an interview with TechCrunch, Founders Gaurav Hinduja and Sashank Rishyasringa said they became intrigued by financial technology while studying towards their MBAs at the Stanford Graduate School of Business. They were fascinated by U.S. companies like On Deck and Lending Club, along with Brazil’s NuBank — incidentally another Sequoia investment — and resolved to establish an analogous service in India.
Rishyasringa explained that mainstream lending institutions provide $140 billion in loans to small business in India annually, but leave a funding gap of $200 billion dollars.
“The entire financing industry in India is based on very traditional, rigid processes,” he mused. “If you are a young, fast-growing business with an emerging financial model like an e-commerce model or startup, it is an uphill battle to get funding.”
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