Digital Lender Capital Float Announces Closing Of $ 15 Million Round With Amazon, Sequoia, Among Others
One area that could see increased usage in today’s environment is lending. Whether it’s consumer or business loans, both could see an upsurge as regular sources of income dry up amid nationwide lockdowns globally. Despite government efforts to provide some comfort through moratoriums in countries like India, consumer lending is expected to increase as people look to borrow more due to the squeeze on loans. income.
And start-up investors, who have had limited activity during the current period, seem to have found this lucrative opportunity. As a result, India-based Capital Float, an online-only consumer and small business lender, announces a new $ 15 million fundraiser, funded by existing investors. Participants in the round included Ribbit Capital, Amazon, SAIF Partners and Sequoia Capital India. The announcement of the end of this round comes after it was reported in January that the company had already raised said $ 15 million.
In terms of deployment, Capital Floar will use these funds to strengthen its capital base and expand its lending operations to SMEs and consumers. With this new addition, the total capital raised by Capital Float to date stands at $ 125 million (INR 800 crore). Additionally, the company has also raised $ 300 million (INR 2,200 crore) in debt financing to date, a common practice among lenders.
With the coronavirus-induced foreclosure crippling businesses, Capital Float is primarily collecting this money to increase its existing lending capacity. “At a time when the industry faces multiple challenges, we are grateful for this strengthening and wish to continue to make lending effortless for SMEs and consumers across the country,” said Sashank Rishyasringa and Gaurav Hinduja, co-founders of Capital Float, in a joint statement. “We look forward to dramatically increasing our lending capacity once the lockdown is lifted to enable SME growth and large-scale consumer spending,” they added.
And that makes sense. Traditional banking and microfinance institutions themselves find it difficult to continue to operate as usual. And this, despite significant liquidity measures by the Indian banking regulator, the Reserve Bank. The situation for banks and MFIs is difficult because businesses are on hold and are therefore unable to settle payments for existing loans. And even before the outbreak, India’s economy was emerging from a rather lean period. This had already put the banking sector under pressure.
Tech-savvy digital lenders able to disburse loans quickly could be a way to extend increased lines of credit to businesses once the bottlenecks are lifted. And the Capital Float loan book is proof of that. Since its inception, Capital Float claims to have disbursed an impressive $ 1.2 billion (over INR 8,800 crore) in loans to over half a million customers in India. The company’s customer base is spread across 300 cities across the country and includes both SMEs and consumers.
With fresh money in the bank, Capital Float is focusing on building up its loan portfolio with its FAST Loans (Fully Automated Small Term Loans) product for SMEs. This fully digital financing solution is designed to meet the working capital needs of SMEs in India, with a focus on Tier 2 and Tier 3 markets.
In addition, the company is also expanding its consumer finance vertical with the online payment finance product, of which Amazon is a major partner, and its personal finance management (PFM) application called Walnut. In addition to offering a personal line of credit, Walnut also recently launched a digital COVID insurance product and a “Find a Store” feature to help users during the current lockdown.
Recently, Capital Float also announcement a new partnership with one of Japan’s largest financial institutions, Credit Saison. As part of the said partnership, the digital lender will provide working capital financing to micro, small and medium enterprises (MSMEs) across India.