Prayaan Capital Pvt. Ltd, which runs a financial technology startup focussed on lending to micro, small and medium enterprises (MSMEs), has raised $1.2 million (approximately Rs 8.61 crore at current exchange rates) in a seed funding round.
The round was led by Accion Venture Lab, the seed-stage investment arm of Accion International.
The Chennai-based company will use the funds to expand its operations and invest in its technological infrastructure, Prayaan said in a statement.
Madhan Mohan, co-founder and CEO at Prayaan, said the fintech was looking to provide a “holistic” financial services experience for MSMEs. “Our aspiration is to be a neighbourhood lender to which these small businesses go for credit and other financial products,” he said.
Separately, Accion President and CEO Michael Schlein said the impact investor was confident in its bet because of its core product focus on helping entrepreneurs gain access to credit.
“Many of India’s entrepreneurs remain unable to access the credit they need to sustain and grow their businesses,” Schlein added.
Prayaan Capital was incorporated in December 2018 and was granted a non-deposit-taking non-banking financial license in June last year. It offers loans from between $1,500 to $30,000 (around between Rs 1 lakh to Rs 21.5 lakh). Target customer segments for the company include small- and medium-sized stores and traders, and small manufacturing units.
Accion Venture Lab, meanwhile, typically invests around $400,000-500,000 to buy minority stakes in its portfolio companies. It is typically the first institutional investor in companies and provides capital, strategic and operational support across a broad range of functions.
In September, the seed-stage investment unit said it was raising a $33 million (Rs 238 crore) fund. At the time, it said it would mobilise $23 million for a co-investment vehicle with third-party investors and $10 million from parent Accion.
Investors in Accion Venture Lab now include Dutch development bank FMO, the Ford Foundation, MetLife Foundation, the French Development Agency’s private-sector financing arm Proparco, Prudential Financial, and Visa.