Jaipur-based non-banking finance company, Finova Capital today said it has raised an undisclosed amount in Series-A funding from venture capital firm Sequoia India. The company will use the newly raised capital for technology product development, digitization of KYC and documents, and market expansion to reach out to rural customers.
Founded in 2015 by husband-wife duo Mohit and Sunita Sahney, Finova capital is an NBFC focusing on MSME lending which includes financially-excluded small-time manufacturers, handymen and service providers. It offers loans of Rs 8-9 lakh for up to seven years and charges between 21-25% interest rate annually.
The company also helps the financially excluded segments come into the mainstream through financial literacy, thus enabling them for digital disbursement and repayment of loans.
Commenting on the investment, GV Ravi Shankar, MD, Sequoia Capital India said, “Finova Capital is addressing a critical need-gap in the highly underserved MSME market by making credit available to small businesses with undocumented income through their innovative credit models.”
The company has disbursed close to INR 45 Cr to over 500 small businesses till date. Currently operating out of five branches across Rajasthan, Finova plans to expand to 15 branches across India by the end of FY 17.
Mohit Sahney, Founder and CEO, Finova Capital, said, “We currently work with 10 lenders and are looking to explore further partnerships to expand our lending portfolio. We expect to end the year at 100 CR AUM in our second year of operations and are profitable from the first year itself.”
“We feel that a marriage of technology & brick & mortar would work well in a complex country like ours, so we are investing in technology to digitize everything right from loan application to disbursement,” he further added.
MSME finance in India is a largely unorganized sector, especially in smaller markets which have significant opportunities for small businesses but lack access to formal credit. The idea of Finova capital germinated with a belief that, if supported well, then the MSME can play a pivotal role in growing Indian economy.