India's micro business financer Lendingkart raises $42.1m in Series D

India’s micro business financer Lendingkart raises $42.1m in Series D

Written by Ruby Hinchliffe
21st May 2020

Lendingkart, an Ahmedabad-based fintech which lends to micro, small and medium enterprises (MSMEs) across India, has raised $42.1 million (RS 319 crore) as part of its ongoing Series D funding round.

The round is made up of a $31 million (RS 233 crore) ‘D1’ round which was raised last August, and a $11.4 million (RS 86.24 crore) ‘D2’ round of fresh investments.

“The fresh round of funding will play a pivotal role in aiding us to help these impacted MSMEs,” says co-founder

The round was led by existing investor Fullerton Financial Holdings, with participation from fellow existing backers Bertelsmann India Investments, Sistema Asia Fund and IndiaQuotient.

The 2014-founded fintech aims to disburse loans within 72 hours and says it has provided more than 100,000 loans to date to roughly 89,000 MSMEs in 1,300 cities.

The start-up, which assesses businesses’ credit worthiness based on big data analytics and machine learning algorithms, says it will put the fresh capital towards expanding its lending bases and improving its tech and analytics capabilities.

“During these unprecedented times, MSMEs, who are the backbone of the economy, have suffered, grappling with varied economic uncertainties,” Lendingkart’s co-founder and MD, Harshvardhan Lunia, said in a statement.

“The fresh round of funding will play a pivotal role in aiding us to help these impacted MSMEs to ensure business continuity amidst the ongoing crisis.”

On 12 May, India’s Prime Minister Narendra Modi announced an expansion of the country’s initial 27 March coronavirus stimulus package, which included an $87 billion injection of liquidity into the financial system by the Reserve Bank of India (RBI) to boost lending to MSMEs.

But asking lenders to take on the risk didn’t work, so India’s finance minister unveiled a $55 billion spending scheme to revive MSMEs, with a bucket of $40 billion collateral-free automatic loans for MSMEs turning over less than $13 million.

Critics have since said that this package is still not enough. As senior advisor at Atlantic Council’s South Asia Center Ketki Bhagwati points out, “a relief package of $55 billion for the country’s biggest employer, which is less than half the size of the balance sheet of a large Indian bank, appears little more than symbolic.”

Lendingkart’s new capital raise to help MSMEs follows that of Chennai-based fintech lender CreditMantri, which raised a smaller $793,000 (RS 6 crore) from investors including IDG Ventures and Accion.