CAPITAL FLOAT HEADING TOWARDS UNICORN PATH
Despite the slowdown, Capital Float originated over Rs. 800 crore of loans and raised over Rs. 1000 crore of debt capital.
The founder of Capital Float, Mr. Gaurav Hinduja and Mr. Shashank Rishyasringa are gradually taking steps forward into the Indian unicorn club.
A non-banking finance company was founded in 2013. It is registered with the Reserve Bank of India and is headquartered in Bengaluru, with offices in major cities of India such as in Mumbai, Delhi-NCR among others.
Capital Float started off with limited capital of Rs. 10 lakhs as a loan, so when it came into existence it had only physical presence in a handful Tier 1 cities. Gradually, it was able to rapidly scale up its capital to Rs. 1 crore credit facility.
Sashank Rishyasringa said that if the idea makes an entrepreneur, the acceptance of which adds wings of success because an idea doesn’t work itself until people from all sides of markets accept it. Over the last six years, the firm has expanded to $ 1.2 billion with 0.5 million customers in over 300 cities across SME and similar customer segments.
The company focussed to fill the missing space of the middle segment which comprises small businesses, self-employed individuals and salaried professionals. The company first tapped the SMEs and then diversified into the consumer space and later built the common technology and data driven credit underwriting platform that allowed the various firms to avail small ticket loans.
In the first phase, the company addressed over 500 SMEs to create quick and convenient short-term SMEs loans, followed by the process of sourcing, underwriting, and issuing the loans. They adopted a “low and grow” approach to test their initial credit models and partnered extensively with entities who were closely addressing the needs of SMEs such as financial advisors, suppliers, buyers, major e-commerce platforms and other important stakeholders.
The channel partnership with close stakeholders of SMEs helped Capital Float upscale its reach as a result today consumer represents 50 percent of their monthly originations.
The Walnut acquisition provided the company an edge of success as 80 percent of the walnut users belong to the age group of 18 to 34 years while over 30 percent of users are new to the credit customers, so it opened a whole new market for them to tap. It helped the company to evaluate digital data to offer loans to the new available segment of the market.
Not only this, after acquisition, the company was in a position to build a strong consumer centric, mobile first technology base within the team that made their lending infrastructure strong. The technology transition such as the formation of cohesive digital financial partners for consumers helped in tracking the expenses of consumers, planning their finances, split bills, and preparing for financial emergencies. It also helped in checking out financial products and getting personal loans via Walnut.
In less than two weeks after acquisition, the company was capable of launching a new product and getting expertise around underwriting self-employed and thin file individuals. The experience with two sided platforms in SMEs opened up many opportunities in tapping the consumer for instance, Amazon began the partnership on the side of SMEs but at present it contributes to substantial share of consumer business and offering easy loans within a fraction of time.
Setting course for unicorn path
At the time of incorporation of the company, what gave the co-founders the confidence was a set of four trends of that time i.e. rising of digital connectivity, emphasis on constructing strong financial infrastructure, focus on data analysis and increasing acceptance of taking credit from both the sources (private or government sectors).
As there was immense opportunity in the sector, a number of other credit lending start-ups in the SMEs and consumer space started emerging like Lending Kart etc.
Finding the right market strategy
Capital Float had an active presence in both of the domains, in SMEs and Consumer Finance, it allowed the company to capture a major share of the retail lending market. Hinduja believed that experimentation should always be encouraged as a culture, with right guardrails the risks can also be managed.
And, it is due to the risk that companies flourish with innovation and creativity without spending a hefty amount on research and development.
Finding the right target audience
The company’s constant engagement to outreach SMEs through strategic collaborations with business strategists in small parts of the towns such as Unja, Narasapira etc. while maintaining collaborations with industry bodies helped the company to reach the target audience.
Robust technology infrastructure
Capital Float can process thousands of applications in an efficient manner, all because of its robust API based platform which helps it to integrate with diverse partners. It has built its own AI based models of Loan Management System, Loan Origination System etc that help in making quick decisions.
Fighting challenges and growing ahead
The company faced a liquidity crunch last October due to NBFCs and many of them were shut down but Capital Float didn’t let its guard down and this survived. They adopted a 360-degree approach to fight the crunch, emphasizing on 4 key strategies to survive the impact of NBFC crisis.
Despite the slowdown, Capital Float originated over Rs. 800 crore of loans and raised over Rs. 1000 crore of debt capital. The company is continuing to grow with the aim to accelerate exceptional customer experience with the help of a data based underwriting model.
EDITED BY: SWATI JHA
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