Microlending and Fintech startup SMECorner has fetched nearly $7 Mn in a fresh funding round that was led by another Fintech company Capital First. Existing investor Accion Ventures and group of high net worth individuals also participated in the funding round.
Several reports claim that the funding constitutes of part equity and part debt, with $3.66Mn (INR 25 Cr) coming through debt and the rest via equity funding. Following the investment, Capital First will pick up 14.2% in the Mumbai headquartered startup. Capital First is said to have funded the entire debt portion and also pumped $1.76 Mn (INR 12 Cr) through equity funding.
SMECorner plans to use the funds to improve the loan books mainly by increasing its offline branches and ramping up its technology platform. It has also struck a deal with Capital First to mutually offer loans and for sharing of technology.
Incorporated in 2014, SMECorner began as a marketplace for selling loans but later changed its business model to become an NBFC. The startup successfully secured its NBFC license from RBI in February this year. Like all Fintech startups, SMECorner promises to offer hassle-free loans to SMEs at market driven interest rates that typically ranges from 19 to 26%. It also offers loan against property.
Currently, SMECorner claims that it has provided credit to 700 SMEs that hail from diverse businesses like manufacturing, wholesale, retail etc.
Over the years Fintech space has seen robust growth, which has been partly aided by unprecedented growth of smartphones and internet. This growth has propelled investment community to pour millions of dollars in the Fintech space with the hope that they will make profitable exits in the coming years. The one crucial factor that has probably worked in the favor of Fintech industry is SME’s inability to secure loans from traditional banks.