INDIFI- TO OVERHAUL ONLINE LENDING PLATFORM

INDIFI- TO OVERHAUL ONLINE LENDING PLATFORM

The conventional financial institutions like banks are not able to underwrite loans for SMEs due to rigid structures.

To fill the gap of lack of credit to the SMEs the startup was set with the aim of the platform to cater the financial solutions that help facilitate smaller businesses gain access to credit. 
 

How it all started?

An IIT Delhi graduate, Alok Mittal, a first-generation entrepreneur, when he was working in the U.S. based VC Canaan Partners, he realized there was a huge financial gap in the MSME segment, unfulfilled credit requirement of around $397 Bn.
 

Seeing the problem and opportunity Alok started Indifi Technologies along with Sidharth Mahnot in the year 2015. The MSME-focused online platform was a good fit for addressing the financing gap in the Indian MSME sector.
 

To begin with, they conducted the preliminary research and established the start-up with a mission to address the issue of credit availability to smaller businesses.
 

How does it work?

Within the two years of the launch, Indifi expanded its footprints and disbursed credit to the tune of $12.4 Mn in over 150 cities. The approach of the company works on two fronts.
 

First Lending to SME segment

Under this segment, the company works in two vertices// travel agencies or OTAs and hotels, restaurants, and cafes (HoReCa). This segment is important to focus as according to the report of FHM, it holds opportunity in capital lending for travel agencies for about $400 Bn. 

They get largely ignored due to which there is a lack of intensive data available for these agencies. Most of the established credit issuing companies blacklist the small-time travel agencies because of the way they carry on their businesses, there is inconsistency in recording of transactions in accounts and varying volume of business due to which estimation of the income becomes difficult.
 

Second Creating data partnerships to simplify lending
 

Indifi has created the bridge by partnering up with the firms that were tracking the SMEs transactions by keeping the data sensitivity protocols in mind.
 

With the help of data, the partnered firm would access the stability and volatility of the borrower and this helps in making decisions on onboarding the borrowers.  

The platform works once a borrower submit his KYC documents along with necessary documents and within 24 hours, he will receive an in-principle sanction. The latest update on the platform addresses the shortcomings e-commerce faces in terms of short-term liquidity to tackle this, the data partners help access the volume of business to assess stability and risk.
 

Challenges faced by Indifi in fintech arena

The initial challenge was to convince the business model to investors in terms of both revenue and users. Second was to convince banks and NBFCs to look at the SMEs not like one huge sector but focus on one particular segment and solve for them so that it becomes easy for them to scale their business.

Another was to onboard data partners especially for travel agencies, the company asked for more sound data as only relevant data can estimate the creditworthiness of SMEs.
 

Present Situation

Today the start-up has many financing solutions in its product line such as it provides term loans, line of credit, invoice, discounting, and advances cash to small businesses in areas like travel, hotel, retail, trading etc.
 

The company has more than 10,000 clientele and it further claims to facilitate more than 25,000 loans for MSMEs across multi sectors including, travel, ecommerce, restaurant etc. It has more than 80 partners in over 200 cities.
 

In 2019, the start-up raised INR 145 Cr. in Series C funding led by London based CDC Group with this their goal is to serve 1,00,000 customers in the span of four to five years. It is also onboarding many products to its product line with the aim of strengthening both horizontal and vertical expansion.
 

The Road Ahead

The newest vertical the company has entered is used car dealership financing and the company will focus on other platforms of similar scale and scope in coming years.
 

Fintech startups that give tough face off to Indifi are Capital Float, Lendingkart, Rubique, CreditMantri, Monexo and others. Here, it is not the competitive advantage that will provide an edge to the company but a mix of both collaboration and competition. 
 

The roadmap is to execute with more data partners, to expand the lending platform to more cities and to onboard more borrowers and lenders.

As according to the report by MAPE, the market is expecting to surge by double up to $2.4 Bn in 2020, the company is finding new entrants across different fintech niche. For a company to jump ahead the curve, it is important to pay attention to all the details and decide the progression of its graph in the online lending arena while keeping its position maintained.
 

Edited by: Swati Jha

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