Lend It Like Beckham
Lendingkart sees huge
potential in providing credit to those who need it but just don't get it
What happens when a banker
and a data scientist come to gether? Simple, the science of online lending gets
simplified. This is what Harshvardhan Lunia did when he joined hands with his
friend Mukul Sachan, a former Indian Space Research Organi sation (ISRO)
scientist, to roll out Lendingkart in April 2014. The Bengaluru-based online
lending startup, which provides shortterm working capital loans from `50,000 up
to `1 crore, has so far disbursed loans in 75 cities across 22 states.
What made Lunia take a
plunge into the financial technology segment was the realisation during his
stint with a couple of big private sector and multinational banks that it was
well-nigh impossible for countless small business owners to get loans despite
being credit worthy.However, the inspiration for the startup was of course the
poster boy of America's online lending ecosystem: Lendingclub, which is listed
on the New York Stock Exchange and has a market value of roughly $4.15 billion.
“From being a startup that
wit nessed one of the worst economic phases in 2008 to going public last year,
Lendingclub's journey has a lot to offer entrepreneurs like us,“ reckons Lunia.
A year after their launch in 2008, when consumer lending was tedious and
investor yields tanked, Lendingclub turned the tables, he adds.
Now Lunia is trying to put
to use those learnings. “In India, we are looking at a `9 lakh crore deficit in
financing. It's a huge and highly underserved market,“ he contends.
Clearly, there is a massive
opportunity and Lunia has been addressing it systematically. First, he
identified the pain area: most of the new small businesses and small and
medium-sized enterprises (SME) do not get loans from conventional channels like
banks or NBFCs. Reason: inefficiencies in the SME lending space. The credit
decisions in banks take months, any poten tial analysis gets hindered by lack
or complete absence of data and information asymmetry is widespread.
Of the 700 towns and cities
in India, barely 150 have direct access to credit, reckons Lunia. Moreover,
92.77% SME beneficiaries have no finance, 5.18% avail finance from
institutional sources and 2.05% through non-institutional sources. “Banks and
financial institu tions don't cater to this loan segment making it a big
opportunity,“ he says.
Lendingkart raised its seed
fund ing from India Quotient, Ashish Goenka, Ash Lilani and Saama Capital in
January 2015; that was followed by a Series A funding from Saama Capital, May
field Fund, Shailesh Mehta a n d A shv i n Chadha in July 2015.
“Our aim is to expand to
every nook and corner of the country,“ asserts Lunia, who has been using
technol ogy to make lending as seamless as possible. Consider this: while
Lendingkart took a week to evaluate and disburse loans in July 2014, today it
takes less than 15 minutes to process an application, four hours to evaluate
the process and between one and three days to disburse the loan.
“Use of technology and
analytics has ensured that our cost of origination, distribution and delivery
is much lower than that of conventional banks and financial institutions,“ he
asserts.
Globally, financial
technology has been a hot segment for investors. It's estimated that the amount
of investment in the segment has grown by 176% in four years -from 2010 to 2014
-with companies like Google, Intel and Microsoft investing in this space, says
Lunia. “In the long run, we aspire to be like Lendingclub.“ Of course, Lunia
will also be aware that the online lending space needs regulation which may
prove a stumbling block in the short to medium term. Eventually, though, any
regulated business is more robust and viable than an unregulated one.
ETM3JAN16
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