MSME lender FlexiLoans raises Rs 290 Cr in Series C for scaling operations

MSME financing platform FlexiLoans has raised Rs 290 crore in a Series C round. The round saw investments from global non-profit for financial inclusion, Accion; Nandan Neelakani-led Fundamentum, and asset management platform Nuveen. Private equity and venture capital investor Maj Invest also participated in the round.

"Majority of the current funds we are raising will go towards helping us scale our operations. We will use it for further leverage on balance sheet and off-balance sheet (items)," Deepak Jain, Co-founder of FlexiLoans, told YourStory in an interview.

"It's a very strong statement from the investors backing us, given the current state of markets," he added. "We are raising almost 1x of our current net worth."

The latest funding round takes FlexiLoans' total funding to Rs 636 crore in equity and over Rs 2,000 crore in debt.

Founded in 2016 by Deepak Jain, Ritesh Jain, and Manish Lunia, FlexiLoans lends to Small and Medium Enterprises (SMEs) like small traders, wholesalers, and retailers who have a monthly turnover ranging from Rs 2 lakh to Rs 20 lakh.

"Currently, were disbursing anywhere between Rs 350 to Rs 450 crore per month. In the current financial year, we aim to distribute Rs 5000 crore," Jain said.

Jain highlighted the company's unique approach to disbursing loans digitally, making them one of the few fintechs to achieve this scale in India. "We are probably the only FinTech which is 100% digital in our sourcing," said Jain.

FlexiLoans has disbursed over 1 lakh loans totaling more than Rs 7,000 crore, reaching over 15,000 pincodes through 100% digital originations without any physical branches.

The company has partnered with major ecommerce and payments platforms like Flipkart, Amazon, Paytm, and PhonePe, enabling seamless loan origination within these ecosystems.

Also Read

Why FlexiLoans decided to focus on digital lending for SMBs

"We also have a very large digital marketing lead flow of our own. So we get roughly 200,000 to 300,000 leads every month on our website. So for the full last year, we would have received three plus million leads. This year, we are targeting anywhere between four to 5 million leads," Jain added.

This approach, Jain said, helps the company get then an edge over large banks when it comes to serving the underbanked sections of society.

According to a report by FICCI and the Indian Banks' Association (IBA), despite the growing formalisation of MSMEs and the expanding data footprint, banks are struggling to maintain profitable lending relationships with these enterprises.

Deepak Jain explains that banks struggle to build meaningful lending relationships with MSMEs primarily due to their traditional acquisition methods. "For banks, even today, the majority of the acquisition happens through the branch model," Jain said, highlighting the high costs associated with branches and relationship managers (RMs).

As a result, banks prioritise larger ticket-sized loans ranging from Rs 15 lakh to Rs 50 lakh or even higher, up to Rs 1 crore or Rs 2 crore. "Given the cost of relationship managers and branches are so high, they would break even only when they do larger ticket-sized loans," he notes.

FlexiLoans offers two primary financial products with an average loan ticket size of around Rs 6 lakh. The first is an EMI-based loan with repayment periods ranging from 12 to 36 months. The second is an invoice financing product, providing short-term credit with repayment terms ranging from 30 to 90 days.

“We continuously add new products, keeping our focus clear,” he said. “We receive about 300,000 leads every month, but we are only able to disburse 3,000 to 4,000 loans. This means many potential customers remain unserved. To address this, we are exploring additional product offerings that can better meet their needs,” Jain said.

(The copy has been updated with additional quotes)