Lendingkart, a New Delhi-based platform for small businesses loans, has raised a Series A of $10 million from Saama Capital, Mayfield Fund, Shailesh Mehta, and Ashvin Chadha.
Since launching a year ago, Lendingkart has processed loans from 50 cities and 17 states across India. It will use its new capital to expand into all towns and cities in India, improve its credit scoring technology, and hire more employees.
The startup is similar to LendingClub in that it allows businesses to apply for loans online, bypassing banks and other traditional finance institutions. Co-founder and chief executive officer Harshvardhan Lunia explains that Lendingkart’s algorithms use 1,500 data points to score credit application. The site claims that its application process takes just 15 minutes, with most loans approved in a few hours and disbursed within three working days.
The site taps into India’s e-commerce boom by working with marketplaces like Flipkart and Snapdeal to provide capital loans to online sellers, who only have to supply bank statements and VAT returns. Lendingkart then supplements that with information from their stores and other sites.
“Lendingkart has enough data available to determine a customer’s intent to pay back a loan, the quality of his product or service, the financial health of his business, and ability to survive with competition,” says Lunia. “We don’t ask the customer to fill out large forms. We scrape this data from public and private sources and APIs.”
He adds that India currently has about 30 million SMBs. While 1.6 million have received loans from financial institutions and 600,000 get capital from sources like friends, family, and money lenders, the vast majority of small businesses–or 92.77 percent–have no outside financing.
Lendingkart believes that India’s e-commerce market, which is expected to be worth $50 billion by 2020, continues to boom, more entrepreneurs will seek working capital, and they will want to get it quickly without filling out multiple forms.
Lendingkart competes with firms like Capital Float, NeoGrowth, and SMEcorner, but sets itself apart by focusing on lenders who need relatively small amounts of money and plans to add a peer-to-peer platform similar to LendingClub.
In addition to e-commerce, Lendingkart also plans to service companies that supply goods to large corporations, online app and game developers, and offline retailers and service providers.
“We will be targeting all the niches in the country where secondary verified data is available to us from third-party sources,” says Lunia. “So rather than bothering the borrower for document submission and evaluation, we will extract data from his ecosystem and evaluate him.”