Our lending technology platform will be intel-inside for banks: Deepak Jain & Manish Lunia

Incubated by Zone Startups India in April 2016, FlexiLoans.com was founded by four Indian School of Business (ISB) alumni. A technology-based online lending platform the start-up raised a sizeable sum in seed funding of Rs 100 crore in October last year from marquee bankers including Sanjay Nayar, (CEO of KKR India), Anil Jaggia (former CIO, HDFC Bank) and Vikram Sud (former head of operations and technology at Citibank). Manish Lunia and Deepak Jain, co-founders, FlexiLoans Technologies P Ltd, in conversation with Ashish K Tiwari talk about the company’s business, risks, growth and fund raising plans.

Is your business model similar to that of venture debt companies?

We are a technology-led business lending platform offering working capital finance which is very different from venture debt. Our loan size starts from Rs 10,000 and borrowers would include small businesses that are underserved, deserving and not bankable. These are the people who may not have filed ITRs, don’t have a CIBIL score, are in the age group of sub-25 years and are looking for loans only up to Rs 10 lakh for durations between 30 and 365 days, which a bank will not give. A unique aspect of our business is offering access to finance at a click. We have already given loans to people in 70 cities across 18 states in India and plan to significantly expand this reach in the next 12 months.

What’s your average loan size like currently?

Our loan size ranges from Rs 10,000 to Rs 1 crore and we lend at upwards of 18%. However, our current average loan is around Rs 5 lakh though we also have disbursed loans of Rs 10 lakh. Our go-to-market approach is through partnerships with supply chain platforms like Amazon, Flipkart, Paytm, Bharat Petroleum, Asian Paints and PoS-service providers. We do loans within 48 hours once the customer has submitted us the basic set of documents required to start the process. Approximately, 40-50% of our customers come from e-commerce.

How do you decide on the deserving criteria of someone who may not have a good CIBIL score?

It involves multiple things and one of the key aspects considered is the cash-flow of the business or the person availing the loan. Besides, we have differentiated algorithms that help our credit team analyse the application and take quick decisions. We’ve realised that the way CIBIL allocates scores is not really in line with how a business would analyse it. There are times when we may not give loans to a guy with a CIBIL score of 780 but give to someone with a 540 score because s/he has a good cash-flow.

Is the risk factor very high in your business?

Being a non-banking financial company (NBFC), we offer completely unsecured lending but we also price in the risk. What we realise is going to these categories does not mean its high risk. We have our partner network for verifications but we obviously do not go to very risky segments. Going to unchartered territories at times is the price of learning. What we are getting to learn is not something that many others in the country will be able to learn.

Our aim is to leverage this learning and become somebody who can actually teach businesses in the banking industry and become their platform of choice. For instance, tomorrow we could reach out to State Bank of India with a proposal to do a Rs 1,000 crore loan segment for them if they’d like.

Five years down, we want to become a platform -- providing credit reach, analytics and customer verification technology -- that will co-lend with public and private sector banks in the country. We will be the ‘intel-inside’ for banks offering them market intelligence and the confidence to lend to businesses.

How has the business grown so far? What’s it going to be like in the next 12 to 18 months?

We have grown the business 100% month-on-month since we started and the growth number is 50% in the last couple of months. Our target is to grow at 25% on a monthly basis over the next 18-24 months. We plan to have loan disbursements of between Rs 300 crore to Rs 500 crore and grow to 250 cities in terms of loan reach. The average loan size could also see an increase from Rs 5 lakh at present to Rs 10 lakh in this timeframe. While e-commerce is a large segment currently, we would be looking to serve many more business categories with a variety of loan products.

When will the next funding round happen?

It should happen within the next 10-12 months and we would be looking to raise at least triple the size we did in the seed round.