SMEpost

NeoGrowth gets Rs 108 crore funding from IIFL Wealth Management

NeoGrowth Credit, a specialised lender to small and medium sized retailers, has raised Rs 108 crore in a new round of funding from IIFL Wealth Management’s Seed Venture Fund besides existing investors, which include Omidyar Network, Khosla Impact and Aspada.

The development comes as investor interest in non-banking finance companies (NBFCs) has increased, especially those lending to small merchants and leveraging technology.

Online lending platform Lendingkart raised Rs 205 crore last month, while Capital Float raised Rs 170 crore in May, underlining the interest in the space even as broader venture capital flow has come down in the first half of 2016.

NeoGrowth gets Rs 108 crore funding from IIFL Wealth Management’s Seed Venture Fund NeoGrowth, which has been set up by serial entrepreneurs Dhruv Khaitan and Piyush Khaitan, has also roped in product and engineering talent from Flipkart and Ola as it looks to strenghten its technology.

Khaitans, who are brothers, sold their payment processing firm Venture Infotek to French firm Atos Origin for over $100 million (Rs 670 crore) in 2010.

NeoGrowth has disbursed over Rs 600 crore in loans till now, and plans to double its loan book every year for the next 4-5 years.

The company has given 4,000 loans till now, which are unsecured in nature and are given to merchants who find it tough to access loans from banks.

“We are delighted with the loan repayment performance, our provisions are less than 2%, a number we have maintained consistently month-on month. We find that small businesses do not get easy access to credit, but once you trust them and lend, they repay the trust in equal measure,” said Piyush Khaitan, MD at NeoGrowth.

NeoGrowth lends Rs 2 lakh to Rs 1.5 crore to retailers and merchants selling on online marketplaces who get a majority of their revenues through credit and debit card sales on point-of sale (PoS) machines. The tenure for the loans are 6 to 24 months.

The loans do not have a fixed monthly installments, but a flexible amount based on the credit/debit card sales of the merchant.

Given the technology platform built by the company and tie-up with banks, a portion of card sales is taken as repayment automatically every day without need of a collection agent.

Source: The Economic Times