Non-banking financial company (NBFC) Finova Capital on Monday said it has raised $15 million in a series B round led by new investor Faering Capital and existing investor Sequoia Capital.
Finova lends to micro, small and medium enterprises (MSMEs), and service providers in Tier II and III towns and rural areas. It caters to loans of ₹5-6 lakh for a period of up to seven years. Founded in 2016 by Mohit and Sunita Sahney, it claims to have disbursed ₹250 crore to over 4,500 customers till date. It operates 52 branches across Rajasthan, and plans to expand to over 75 branches across Rajasthan, Delhi and Madhya Pradesh by the end of this year.
Finova analyses borrower’s cash flows for credit assessment, instead of asking for formal documentation since the segment it caters to can rarely provide formal credit history. The company has created custom templates that assist in credit underwriting across various sectors.
“We are at an important juncture as we continue to find innovative ways to provide the unbanked population access to business loans—doing so as one of the few players in the running of a profitable operation from inception," said Finova's founder CEO Mohit Sahney.
Faering Capital is a a mid-market-focused private equity (PE) firm founded by Sameer Shroff and Aditya Parekh, the elder son of HDFC group chairman Deepak Parekh.
The deal also marked Faering’s second-investment in an NBFC from its second fund. Mint reported last December that WheelsEMI, a specialist lender focused on used two-wheeler financing, had raised ₹100 crore in a round led by Faering.
Bengaluru-based Unitus Capital acted as the financial advisor to Finova.
Digital lending platforms for small and medium enterprises have seen significant traction recently, as startups look to address the needs of a large and fragmented market. Ziploan, another digital lending platform, raised $12.5 million in a series B round led by SAIF Partners, where existing investors Matrix Partners India, Waterbridge Ventures and Whiteboard Capital also participated.
