STARTUP-STORIES

Flexiloans Aims to Raise $35 Million in New Equity Round to Boost Valuation

SUMMARY

1. Flexiloans is seeking ₹300 crore ($35 million) in a new equity round, potentially raising its valuation to ₹1,200 crore ($140 million). Notable potential investors include Accion and Fundamentum, led by Infosys co-founder Nandan Nilekani.

2. The funds will be used to expand Flexiloans’ lending operations and enhance its technology. Despite challenges in the digital lending sector post-pandemic, the company has demonstrated strong financial performance and a robust technological edge, including quick loan disbursement and advanced credit analytics.

Flexiloans, a prominent digital lending platform for small businesses, is in advanced discussions with global and domestic investors to secure approximately ₹300 crore ($35 million) in a new equity round. If successful, this funding will elevate Flexiloans' valuation to around ₹1,200 crore ($140 million), a significant increase from its previous valuation of ₹700 crore.

Notable Investors in the Mix

Potential participants in this funding round include Accion, a US-based nonprofit dedicated to financial inclusion, and Fundamentum, led by Infosys co-founder Nandan Nilekani. However, neither Flexiloans, Accion, nor Fundamentum have yet responded to requests for comment regarding this investment.

Expanding the Lending Platform

Founded in 2016 by Indian School of Business alumni Deepak Jain, Ritesh Jain, Manish Lunia, and Abhishek Kothari (who has since left to lead Pepper Money India), Flexiloans specializes in providing digital lending solutions to small businesses. The startup competes with other notable players in the sector, such as Indifi and Lendingkart. Backed by Sanjay Nayar, former KKR India head, the company is focusing on using the new funds to bolster its lending operations and secure additional debt.

Funding Climate and Market Dynamics

This new round of funding arrives at a crucial time for the digital lending industry, which has faced challenges in the wake of the Covid-19 pandemic. Despite a general slowdown in the unsecured consumer lending market, small business-focused lenders like Flexiloans are gaining attention. The funding environment remains tough, but technology-driven players with strong asset quality are seeing increased interest from investors.

In 2022, Flexiloans raised $30 million from Denmark-based MAJ Invest and other investors. The company's previous major equity infusion highlighted its growth potential, and the upcoming round is expected to further accelerate its expansion.

Strong Performance and Technological Edge

Flexiloans is supported by non-banking finance company Epimoney, which plays a significant role in its operations. According to a March 2024 report by India Ratings & Research, Flexiloans reported a net profit of ₹14 crore for the first nine months of the last financial year, bouncing back from a loss in FY22. The company’s assets under management are nearing ₹2,000 crore.

The company’s digital approach to credit underwriting and customer verification enhances its efficiency. Flexiloans uses a proprietary credit analytical tool to assess borrower creditworthiness swiftly, with loan decisions communicated within 15-30 minutes and funds disbursed within 24 hours.