Homegrown mid-market private equity firm Paragon Partners has led a new round of funding in SMEcorner, a microlending platform for small and medium businesses.
The company said in a statement that it has raised $30 million (Rs 216.6 crore at current exchange rate) in a mix of equity funding and debt capital through this transaction.
While Paragon has infused $10.5 million, existing investors Quona Capital, Accion Venture Lab, and some high net-worth individuals also chipped in. With this, the company has concluded its Series B fundraise.
The microlender aims to grow its loan book to over Rs 1,500 crore and reach more than 20,000 customers.
"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," said Siddharth Parekh, co-founder at Paragon.
Paragon, which is in the middle of raising funding for its second alternative investment vehicle, has previously backed Cravatex Brands Ltd, InCred Finance, Capacite Infraprojects Ltd and Maini Precision, among others.
SMEcorner, whose legal name is Digikredit Finance Pvt. Ltd, was founded in 2013 by Samir Bhatia, former chief executive and managing director at Equifax Credit Information Services.
SMEcorner provides small-ticket loans to unorganised retail business owners such as kirana stores, readymade garment sellers, chemists and others. It extends unsecured loans from Rs 50,000 to Rs 25 lakh, and loan against property of up to Rs 1 crore for a period of six months to two years.
The lender obtained its NBFC (non-banking financial company) licence in February 2018. It claims to have disbursed over Rs 500 crore in loans since the time of receiving its licence.
It is currently operational across 15 cities and has served over 8,500 customers.
The company had raised Rs 90 crore in its last round of institutional funding in March last year.
Private investment activity in the NBFC segment is taking place even as the sector continues to face a liquidity crunch that began after infrastructure developer and financier IL&FS Ltd fiasco in 2018.
In January this year, Fusion Microfinance Pvt. Ltd raised Rs 500 crore ($69.6 then) in a funding round led by existing investors Warburg Pincus and Creation Investments.
In October last year, Kogta Financial (India) Ltd raised Rs 300 crore (about $42 million) in a Series C round of funding led by new private equity investor Creador.
In September, digital lending platform LoanTap, which offers loans and overdraft products to salaried professionals, raised $12 million in a Series B investment led by Avaana Capital, an Indian venture-growth investment firm.
In the same month, Flipkart co-founder Sachin Bansal acquired Chaitanya Rural Intermediation Development Services Pvt. Ltd by investing Rs 739 crore (about $104 million) in the company and taking charge as its chief executive.