Jaipur-based non-banking financial company Finova Capital has raised $6m over two tranches from Sequoia India.
Sequoia, which first invested in the company in late 2017, has provided the funding to enable the company to expand, invest in technology and acquire new technology.
The MSME (micro, small and medium enterprise) sector in India comprises more than 58 million enterprises, employs more than 111 million people and contributes 37% of the country’s GDP according to the company.
Founded in 2015, Finova is a NBFC (A Non-Banking Financial Company) licensed by Reserve bank of India. The idea of Finova originated from the belief that if supported well, then micro & small medium enterprises can play a pivotal role in growing Indian economy.
Headquartered in Jaipur. It provides loan to both urban poor & rural poor to meet their productive requirements in starting new business or for growing an existing business.
Finova claims to be one of the very few lenders in the country that can effectively address the debt requirements of this sector. It lends to the financially-excluded small-time manufacturers, handymen and service providers, such as electricians, plumbers and carpenters, besides paanwalas, milkmen, laundrymen and hairdressers. It offers loans of Rs 8-9 lakh for up to seven years and charges an annual interest of 21-25%.
Mohit Sahney, founder and CEO, said, “We look forward to our partnership with Sequoia as we work towards making Finova a leading MSME lending platform in the country. There is dearth of organized credit available to a large proportion of MSME businesses largely due to lack of formal income, documentation and financial literacy.
“We have formulated a way to efficiently serve this under banked population and are working towards facilitating their access to credit. We are investing significantly in technology as we believe it is an enabler to the traditional brick and mortar model, and the most efficient way to deliver credit to our target segment.”
Finova works with 13 lenders who are committed towards the MSME space including IFMR, Reliance, DCB Bank, Capital First. To date, the company has disbursed loans of Rs.90-plus crore to over 1100-plus customers. It also claims to be one of the very few new age NBFC’s who are profitable from their first year of operations.
Last year, investment research platform Smartkarma closed an undisclosed Series B funding round led by Sequoia India. The VC also reportedly led a $12.3m round in lending app MoneyTap.
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