ICICI Venture, the investment arm of ICICI Bank, led a $35 million funding round for Indifi Technologies, an Indian firm that lends digitally to small and medium businesses.
The eight-year-old startup’s all-equity Series E round included British International Investment, OP Finnfund Global Impact Fund I, Omidyar Network India, Flourish Ventures, and CX Partners.
India has 63 million MSMEs. These businesses account for about 30% of the nation’s GDP and employ over 113 million people. Despite their economic importance, these enterprises struggle to get loans. In December 2018, the Reserve Bank of India’s Expert Committee estimated a worrisome MSME credit shortfall of $243 billion to $303 billion (20–25 lakh crore Indian rupees).
Indifi, founded in 2015 by Alok Mittal and Siddharth Mahanot, provides loans to businesses with an annual turnover of $36,400–$1.21 million. The startup’s online marketplace lets firms in travel, e-commerce, hotels, and retail get unsecured loans suited to their needs.
“That is a demonstration of the fact that other banks and NBFCs trust us to be able to run a tight lending ship not just from a technology and analytics standpoint, but from a core operations standpoint,” Mittal told TechCrunch.
The Gurugram-based business has disbursed over 73,000 loans worth $497 million in 400 cities. Its assets under management rose 100% to $182 million in March.
Indifi has 30% of customers with less than two years in operation, below the bank lending cutoff. Over 20% of Indifi’s customers are women entrepreneurs who often have trouble getting finance. Mittal said the goal was to target underserved markets.
Mittal claimed Indifi expanded 100% in value and 150% in loan volumes in the past year. He stated the startup has been profitable for six quarters since February 2022 and improving.
For six months, Indifi has delivered quick loans and working capital credit to direct-to-consumer brands and software companies. Mittal said the business will use the capital to find new market sectors.
The co-founder said the startup would expand its IT infrastructure and develop new solutions to help more businesses receive loans.
Indifi processed $7,000 in loans in 2019. However, technology investments have reduced its average loan amount by 30% over 18 months to $6,000. It lends $600–1,200 to micro and small enterprises and medium-sized businesses.
“In the last 18 months, we have been able to devise operating cost stacks that can serve a one-lakh rupee customer,” Mittal added.
Indifi uses segment-specific models instead of general criteria like three years of vintage to estimate model risk appropriately. It also automates loan generation, eliminating data collecting and underwriter control.
“Indifi has created a best-in-class digital technology platform for lending to the large MSME sector, enabling credit for this highly underserved segment of the Indian economy,” said Nikhil Mohta, senior director for private equity at ICICI Venture. “Indifi’s strong relationships with ecosystem and liability partners help it scale quickly. We are pleased to cooperate with Indifi in the future due to its strong governance and risk frameworks.
ICICI Venture invests financially, but ICICI Bank is an Indifi partner. Mittal thinks the bank’s VC money will lead to business talks.
Indifi has raised $81 million, including the newest fundraising and the November 2021 $45 million Series D round. The startup employs 700 individuals in product analytics, technology, business development, customer help, and service.
Mittal said going public would be a good way to obtain funds. He stressed that offering a wide choice of items and growing their consumer base is their top focus. The startup wants to triple loan disbursements “over the next couple of years.”
Indifi competes with Mayfield-backed Lendingkart, Inclusive Fintech 50-invested FlexiLoans, and Google- and Tiger Global-backed Progcap.
