FMO considers $10 mn loan to Mumbai-based NeoGrowth

FMO considers $10 mn loan to Mumbai-based NeoGrowth
Photo Credit: 123RF.com
22 Jul, 2020

Dutch entrepreneurial development bank FMO recently said that it was considering a $10 million investment in Mumbai-based early stage fintech startup NeoGrowth Credit.

With the proposed investment, NeoGrowth plans to further on-lend to micro, small and medium-sized retail merchants, according to FMO’s disclosure on its website dated July 16.

The Hague, Netherlands headquartered bank invested a total of Rs 125 crore ($16.7 million as per current exchange rates) in the startup across two funding rounds in 2017 and 2018 as well.

NeoGrowth declined TechCircle’s request for comment on the development.

Serial entrepreneurs and Venture Infotek founders Dhruv Khaitan and Piyush Khaitan founded NeoGrowth Credit in 2010. The company, primarily involved in the merchant cash advance business, also provides flexible loans to merchants who accept card or other digital payments from customers and offers them automated repayment options.

The company analyses turnover data from a retailer’s point-of-sales terminal to determine their creditworthiness and claims to disburse loans in three days. It also conducts loan collection electronically on a daily basis, addressing seasonality in the business of merchants. The firm partners with businessmen from tier-1 and tier-2 Indian cities.

“The loan to NeoGrowth achieves FMO’s goals of providing access to finance to first generation entrepreneurs. Traditional bank underwriting excludes a large portion of creditworthy SME merchants because they do not have reliable financial statements, a credit history (“thin file” customers) or equipment or similar assets that can be provided as security for a bank loan,” FMO said in the statement.

FMO has backed other Indian companies, such as Bengaluru-based fintech firm Innoviti Payment Solutions, where it participated in a Series C funding round in June, and Gurugram based agritech startup DeHaat, where it was part of a $12 million Series A funding round in April.

Comment(s)