Bangalore-headquartered Zen Lefin Pvt Ltd, the company behind Capital Float, an online platform that provides working capital finance to SMEs (small and medium enterprises) in India, has received Rs 12 crore ($2 million) in funding from Aspada Investment Company.
Capital Float was founded by Gaurav Hinduja and Sashank Rishyasringa—both hold MBA degrees from Stanford University. Hinduja had worked at Gokaldas Exports, while Rishyasringa was an engagement manager at McKinsey & Company prior to starting Capital Float.
Capital Float works with underserved small businesses via a technology-led loan origination and credit underwriting platform. It provides short-term loans to SMEs that can be used to purchase inventory, service new orders or optimise cash cycles. Borrowers can apply online in a short time, select desired repayment terms and receive funds in their bank accounts in seven days. The firm caters to SMEs across a variety of sectors, including manufacturing, services and e-commerce.
"Small businesses are the key to India's sustained growth, yet most lack access to mainstream bank finance and cannot easily access working capital and short term debt. As a result, many resort to borrowing from friends and family, supplier credit, or high interest loans from informal sources to meet the day-to-day funding needs of the business," said Hinduja.
"The majority of SMEs today operate with cash cycles of 60 days or longer, with a few institutional options for working capital finance. By investing in technology, we've lowered the costs of customer acquisition and credit decision-making and developed a methodology for timely and transparent financing that can benefit a vastly underserved and unorganised segment," said Rishyasringa.
Bangalore-based Aspada provides long-term, growth capital to entrepreneurs who address large market needs. Backed by Soros Economic Development Fund (SEDF), Aspada has previously invested in Lawrencedale Agroprocessing India, a fresh vegetable supply chain company; ThinkLink Supply Chain Services, a provider of turnkey project management, design, skill development and staffing services; NeoGrowth Credit, a merchant cash advance business that provides loans to small merchants; and Schedulers Logistics, an cold chain logistics provider.
In addition, Aspada also oversees the portfolio of the SONG Fund, an early-stage VC firm funded by SEDF, Omidyar Network and Google.
"Capital Float has built a sophisticated platform that is unique within the Indian small business lending segment. There are numerous global proxies of enormous scale in this model, and we believe that the Capital Float team can build a world-class organization that can alter the market for SME finance in India and beyond," said Kartik Srivatsa of Aspada.
(Edited by Joby Puthuparampil Johnson)