Invoice discounting marketplace KredX has raised about Rs 40 crore in series A funding led by Sequoia Capital India along with existing backer, early stage investment firm Prime Venture Partners.
The Bengaluru-based startup has built a technology marketplace, where it connects small and medium enterprises (SMEs) with investors who are willing to buy these unpaid receivables to help them with their working capital cycles.
KredX was founded in 2014 by Manish Kumar and Anurag Jain as Mandii, while Puneet Agarwal joined the team last year.
While Kumar and chief operating officer Jain are graduates of IIT Kanpur who earlier worked at HSBC, Agarwal has a masters in computer science from Stanford University and worked for over a decade at Google. The company had raised Rs 5 crore from Prime Venture in April.
“We see Kredx as a marketplace enabling trade finance, and we love the fact that the team is narrowly focused on solving one problem very keenly and clearly,” said Sequoia Capital MD Shailendra Singh.
“The company is transforming the informal lending market to a new invoice discounting marketplace for enabling institutional credit to small and medium sized businesses.”
Financial technology has proved to be one of the most lucrative sectors for Sequoia Capital India, with exits like Freecharge (acquired by Snapdeal for $400 million), Prizm Payments (acquired by Hitachi for $250 million) and more recently Citrus (acquired by Naspers for $130 million). Sequoia’s other portfolio companies in the space include online SME lender Capital Float, wallet player Mobikwik and retail payment solutions provider Pine Labs.
“We want to become one-stop shop for everyone doing invoice discounting, so that banks and NBFCs can also use our platform and technology,” said Kumar.
The funding will be used by KredX to strengthen its technology, data and sales functions within the company. Till date, it has enabled around 3000 transactions ranging from Rs 1 lakh to Rs 1 crore, with a focus on unpaid invoices from “blue-chip companies”. KredX sees the invoice discounting market as a $100 billion opportunity.
While banks and institutional lenders have been providing these services, KredX says these institutions are more focused on the manufacturing industry. The Bengaluru-based startup provides invoice discounting services to SMEs across industries, including the service industry. Some of the biggest sectors it has an exposure to include technology services, logistics and retail.
Typically, KredX takes 3-4 days to go through documents filed by an SME and claims that it finds buyers for these unpaid invoices in 12-48 hours after listing them on their platform. Price of the invoice is decided by the SME.
Invoices typically take 30-90 days to be paid, which impacts working capital cycle for small firms. According to KredX, 97% of the Indian SMEs reported having experienced late payment of their invoices while 56% dealt with working capital issues due to late payment or unavailability of credit.
Besides banks and non-banking finance companies, buyers for these invoices include wealth management firms and high networth individuals (HNIs) with a minimum investment size of Rs 3 lakh. These HNIs typically get returns of 12-20% in 30-90 days.
Source: The Economic Times
