Capital Float raises $15 million from Ribbit Capital, SAIF Partners, Amazon & Sequoia Capital India.

Capital Float recently raised $15 million from its existing investors Ribbit Capital, SAIF partners, Amazon and Sequoia Capital India.

Founded in 2013 by Gaurav Hinduja who has deep experience in operations and Sashank Rishyasringa who worked with McKinsey, Capital Float is an online platform that provides working capital finance to SMEs and personal loans in the unorganized lending space. It finances the loans by itself as well as from other financial partners like banks and HNIs.

Equity raised till date: $125 mil

Debt raised till date: $300 mil

Loans disbursed till date: $ 1.2 bil

Revenue (2019): Rs. 249.7 cr

Loss (2019): Rs. 98.5 cr

Gross NPAs: 4.8% of AUM

Recently there was news that Naspers (owner of PayU) was trying to acquire Capital Float but Naspers was not onboard with a valuation of $500 mil

Capital Float offers

1. Short-Term Loans for SMEs ranging between 5-50 lakhs

2. Financing for merchants up to 300% of sales via their POS machines.

3. Unsecured loans to schools to improve their infrastructure

4. Online Checkout Finance. They have partnered with Amazon (also one of the investors) to provide financing options at the check-out page

5. Consumer loans via Walnut, a Personal Finance App which it acquired in 2018.

6. Loans to consumers in partnership with companies like Byju’s.

The demand for credit in 2020 is set to reach $1.29 trillion in India but with growing NPAs the supply is only set to go down. Fintech start-ups have to utilize this opportunity but at the same time keep their loan books healthy.

Capital Float is facing stiff competition from incumbents like Bajaj Finance which has a strong online as well as offline presence. Other fintech lenders like LendingKart and ZestMoney are looking at offline avenues to lend. In these uncertain times, dependency on algorithms and online lending alone might be a dangerous strategy for Capital Float.

Indifi, another lending focussed start-up has tied up with Edelweiss retail finance. This way, traditional players can leverage technology platforms and data of the start-ups to expand the addressable market, while the start-ups can depend on the financial clout of these traditional lenders.

This funding round will help Capital Float wade through these uncertain times and provide much needed loans to SMEs to meet their working capital needs once the crisis passes. What do you think Capital Float should do to survive and build a sustainable model?

Via – P. Bhargav