Fintech startup SmartCoin raises US$7M in Series A

Mobile-based consumer lending startup SmartCoin raised US$7 million in a fresh round of funding this week. The Series A round was led by LGT Lighthouse Aspada, the India wing of impact investment firm LGT Lighthouse, and SmartCoin’s seed investors Unicorn India Ventures and Accion Venture Lab also participated. Unitus Capital was an exclusive financial advisor to the deal.

The microlending startup’s goal is to provide access to credit for those who are insufficiently served by India’s formal banks, SmartCoin Co-founder and CEO Rohit Garg said in a statement.

“Our choice to build for the credit-starved mass market and strong portfolio performance has helped SmartCoin stand out in a crowded fintech market,” he added, pointing to deeper customer insights and a gamified ladder as the key to developing better credit products.

The Bengaluru-based microlender had last raised US$2 million in a pre-Series A round led by Accion Venture Lab and an undisclosed Chinese venture capital fund. It rakes in an estimated annual revenue of $3.5 million and has accumulated $9.5 million in funding in the years since it founding (Owler).

Having received their non-banking financial sector license in October 2019, the company stated that the funds will go into growing its loan book, as well as onboarding 10 million new users over the next year. It also said that the monies will go into expanding its data science team, launching new products, and advancing its artificial intelligence/machine learning (AI/ML) based underwriting platform.

“SmartCoin’s business model can provide data-driven insights in a customer segment that is otherwise opaque and can unlock means of formal credit and financial services. We believe that their AI/ML engine can over a period of time also deliver personalized digital services in areas such as education and healthcare for this segment,” said Kartik Srivatsa, managing partner, LGT Lightstone Aspada.

Founded by alumni of the Indian Institute of Technology and the Indian Institute of Management, the fintech startup launched their operations in 2017. It provides micro-loans to middle and lower income groups claimed to be underserved by the country’s vast banking and non-banking financial system. Its user base includes micromerchants, as well as self-employed and salaried individuals.

So far, it boasts of having disbursed over $50 million in loans to over 100,000 users through its platform. The startup relies mainly on app technology to evaluate the risk profile of users through data science and machine learning. Users can opt for loans anywhere between IN₹ 1000 to 25000 (approximately US$13 to $300) with a maturity of 91-120 days.

The company has also said that it has been recognized internationally by names such as Visa, IFC and MetLife as a startup that is driving financial inclusion around the globe.

The big fish in the fintech industry include Ahmedabad-based LendingKart and Bengaluru-based Capital Float, but Smartcoin also competes with Cash Suvidha, IndiaLends and LoanTap.

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