Bengaluru-based micro-lending startup SmartCoin has raised USD 7 million from LGT Lightstone Aspada, the India-focused impact investment arm of LGT Lightstone. Existing investors such as early-stage VC firm Unicorn India Ventures and US-based Accion Venture Lab also participated in the new round.
The company had last raised USD 2 million in 2018 from Shanghai and Beijing-based early-stage venture capital firm 01VC, along with Accion Venture Lab, Unicorn India Ventures, and Mumbai-based fintech accelerator ISME ACE.
The lending startup, which received a non-banking finance company (NBFC) license last year, plans to use the fresh funds to quadruple the total amount of disbursed loans to INR 1500 crore (USD 202 million) from INR 400 crore over the next 12 months. SmartCoin also aims to double its user base to 10 million in the same time period.
Founded in 2016 by Rohit Garg, Amit Chandel, Jayant Upadhyay, and Vinay Kumar Singh, SmartCoin offers personal loans ranging between INR 1,000 to INR 10,000 (USD 13.5 to USD 135) for the duration of seven to 45 days. It uses artificial intelligence and machine learning-based underwriting engines to sanction micro-loans.
“While traditional players find it difficult to serve them (underserved) owing to volatile incomes and lack of formal financial and credit histories, we have been able to harness the power of alternate data and machine learning through our proprietary AI/ML-powered risk-assessment engines,” Garg, the chief executive of SmartCoin, told local media Economic Times (ET).
Anil Joshi, managing partner at Unicorn Ventures, told KrASIA that the firm invested in SmartCoin “when they were experimenting with their technology and in less than three years, it is now doing 60,000 plus loans a month, upwards of INR 30 crores every month.”
Although there are risks in micro-lending space because of the lack of reliable credit score of small entrepreneurs, solopreneurs, and self-employed candidates looking for a loan, Joshi said, the company is using alternative data such as the kind of house that borrowers live in and the kind of work they do. SmartCoin is using such data to extend loans to those who are underserved by traditional financial institutions such as banks.
“And as they gather more and more data, the risks will go down,” he said.
Kartik Srivatsa, managing partner, LGT Lightstone Aspada, ET report said, believes, “SmartCoin’s business model has the ability to provide data-driven insights in a customer segment that is otherwise opaque and can unlock means of formal credit and financial services.”