Finova Capital, a non-banking financial company, has raised an undisclosed amount in a Series A round from Sequoia Capital India Advisors. This is the first external round of funding in the company, which started off the business with a capital of Rs 10 crore.
The Jaipur-based firm, which offers credit to small businesses with undocumented income, has paid about Rs 45 crore to 500 small business till now; currently runs five branches in Rajasthan.
The firm will utilize the funding to open more branches across the country. It’s looking forward to open 10 branches by the end of 2017-18, reports VCCircle.
Founded in 2015 by husband-wife duo Mohit and Sunita Sahnay, the company offers loans to the people who do blue-collar jobs such as electricians, plumbers, carpenters, milkmen, laundrymen, hairdresser as well as financially-excluded small-time manufacturers.
It offers loans of Rs 8-9 lakh for up to seven years and charges an annual interest of 21-25 per cent.
“A large chunk of India’s MSME market falls into the services sector. And this is the segment we cater to – those who do not have access to capital due to lack of formal documentation, financial literacy or presence of mid-level players,” said Finova founder and CEO Mohit Sahney.
He added that he is currently working with 10 lenders and looking forward to join hands with others to expand the lending portfolio.
The company claims to be profitable from the first year of operation and expects to end its second year with Rs 100 crore in assets under management.
In September this year, Shubh Loans raised $1.5 million in a pre-Series A round from SRI Capital, Japan’s BeeNext and Pravega Ventures. MSMEs lender Aye Finance had also raised Rs 44 crore rupee-denominated debt from the Netherlands-based Triodos Bank.
According to an industry estimate, about 36 million enterprises in the MSME (micro, small and medium enterprises) sector contribute to over 45% of India’s manufacturing output. This offers a unique opportunity for NBFC to finance micro, small and medium sized enterprises.
Finova: Website
