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Indian lending startup SMEcorner raises USD 30 million

The startup aims to lend about USD 138.3 million (INR 1000 crores) by the end of the next financial year.

Mumbai-based SMEcorner, a fintech startup that provides credit to small and medium enterprises, Monday said it has raised USD 30 million in a Series B round led by Indian private equity firm Paragon Partners, with participation from existing investors including Quona Capital, Accion Venture Lab, as well as company founder and CEO Samir Bhatia, among others.

The latest round, which was raised as a combination of equity and debt, saw Paragon Partners investing USD 10.5 million, while the balance came from other investors, the company said in a statement. Last year in June, SMEcorner had raised series A+ round led by Quona Capital.

The startup plans to use fresh funds to scale business, forge partnerships, and expand existing markets over the next financial year, with an aim to lend USD 138.3 million (INR 1000 crores) by the end of the next financial year.

“The additional capital will enable us to reach over 20,000 new customers and grow our distribution in the coming year,” Bhatia, founder and CEO of SMECorner, said in a statement. “We will continue to focus on building proprietary technology which will help us serve our customers more efficiently.”

Founded in 2014 by Bhatia and Sneha Shah, SMEcorner started as a financial lending firm, catering to the unorganized retail sector, primarily shopkeepers, in India. It obtained its (non-banking financial company) NBFC license in February 2018 and is currently present across 15 cities in India.

The startup claims to have serviced over 8000 unique customers and has disbursed over USD 76 million (INR 550 crores) since obtaining the license. The company said it has about USD 55 million (INR 400 crores) worth of assets under management.

Lending to small and medium businesses is slowly catching up in India and companies are either getting an NBFC license themselves or are partnering with a third party to enable lending for their clients. Recently, B2B e-commerce firm ShopX that works with retailers partnered with LoanTap to facilitate credit for its customer base.

SMEcorner competes with new companies as well as bigwigs like SoftBank and Alibaba-backed Paytm, Walmart-owned payment platform PhonePe, and Coatue Management-backed payment solution firm BharatPe. While for BharatPe, lending to small retailers has become the focus area over the last two years, other fintech companies are steadily strengthening their focus towards this space.

“SMEcorner’s high tech and touch model makes it uniquely positioned to facilitate credit to the highly underpenetrated micro and small enterprise segment,” Siddharth Parekh, co-founder and senior partner, Paragon Partners, said in a statement. “The asset-light model powered by several co-lending partnerships makes the business resilient from liquidity challenges and a highly granular loan book makes it resistant to any lumpy asset quality issues.”