Capital Float Digitally Removes Credit Gap
India is constantly showing its prowess in entrepreneurship with the passage of time. In the near future, it is expected to excel further given more support. So long, finance has been one area for enterprises which at times proved to be the bottleneck. However, digital lending company Capital Float removes this snag making it easier for business to accrue finance easily than ever before. The company believes that it can work towards bridging the credit gap in the market. With the intelligent use of technology, it looks toward enhancing the borrower experience while retaining unit economics and widening its reach.
In an exclusive interaction with CXOToday, Rohan Angrish, CTO, Capital Float, takes us through how they have made it possible with the aid of technology which helped reduce wait times for SMEs, and enabled disbursement of funds in just three days. Last month, the company announced an equity raise of $45 Million (Rs. 293 crores) in Series C funding.
CXOToday: Tell us about your company, the Capital Float platform. How are you different from traditional lenders?
Angrish: Capital Float stated its journey in 2013, it aimed to build a large, sustainable business in terms of scale and reach. SMEs in India have largely been under-served by traditional financiers. This is due to the lack of required documentation, inability to pledge collateral and ineligibility to comply with conventional credit parameters. Amidst these short-comings, we understood that SMEs have a wealth of data, which if utilized smartly can be used to understand their working capital needs better and accordingly help design highly customized credit products.
We operate in India’s largest hybrid lending marketplace. On this platform, we partner with leading banks (such as IDFC) and NBFCs (such as IFMR) to co-lend loans to borrowers. We ensure ‘skin in the game’, by co-lending, on average, 20 percent of all loans disbursed via the marketplace. The marketplace helps combine complementary strengths of the lending institutions and Capital Float, we leverage their enormous balance sheets and market intelligence, while they optimize our technology and products to penetrate newer borrower segments.
In essence, if a user can order food, book tickets and hail a cab using apps, why can’t users apply for loans using an app? With Capital Float, we’ve enabled SMEs across India access to funds on their fingertips.
CXOToday: Tell us about your expansion plans across India. Any plans to go global in the near future?
Angrish: Over the past year alone, we have disbursed loans of over Rs. 2,100 crores to 12,000 plus customers across 300 cities. We will continue to identify and serve under-served SME segments. We have also ventured into financing micro-entrepreneurs like taxi drivers, travel agents, and Kirana store owners. Although these are small-ticket loans, the sheer size of these segments indicates immense potential. India will keep us busy for the short term. By the end of the financial year, we expect to have our geographic footprint spread across 500 cities from our current number of 300 cities, without increasing headcount.
CXOToday: Who are your customers?
Angrish: These include SMEs who have traditionally been denied finance due to ineligibility based on credit parameters set by formal financiers, lack of collateral and inability to furnish the required documentation. We have designed different working capital products for each of these segments and offer the widest SME loan portfolio across any Fintech startup.
CXOToday: Please throw light on your corporate partnerships.
Angrish: The company has partnered with ecosystem leaders across various verticals such as e-commerce (Amazon, Flipkart, Snapdeal, PayTM, Shopclues, eBay, Alibaba, etc.), travel and hospitality (VIA and Yatra), retail (Mswipe, Pine Labs, Bijlipay, ICICI Merchant Services) and taxi aggregators (UBER and Ola) etc. Through these partnerships, we are able to effectively expand our reach to SMEs operating on these platforms.
CXOToday: You say that you are cutting down on the waiting period for loan disbursement, please explain.
Angrish: Waiting periods for loan disbursements have traditionally taken 8-12 weeks, which many a time proves to be too long for an SME seeking a working capital loan. We have drastically reduced the waiting period to 3 days. SMEs can log onto our website (www.capitalfloat.com) from anywhere using a computer or mobile device, and apply for a loan in under ten minutes using an online form. The process of verifying data to disbursement of funds takes roughly 72 hours. We’ve disbursed the fastest loan to Kirana store in India, clocking under 90 seconds, by leveraging AADHAAR and the IndiaStack initiative. We’ve enabled SMEs to respond to their business opportunities on time.
CXOToday: You claim that Capital Float will disburse Rs. 5,000 crores in SME loans in FY18- please elaborate?
Angrish: Currently, the proportion of marketplace lending to our overall lending is 35 percent. By the end of the financial year, we expect this to increase to 50 percent. Additionally, our recent funding will help us increase our geographic footprint and make sizeable investments in technology to help us disburse the target of Rs. 5000 crores by the end of FY 18.
CXOToday: How welcoming are small businesses and start-ups to your solutions?
Angrish: We have witnessed a seven times growth in our customer base in the last 12 months and are aiming to achieve the target of serving 30,000 customers by end of this financial year. We’ve also witnessed a four times growth in the number of cities we’ve catered to in the last 12 months. This geometric increase in the number of customers and cities indicate that SMEs are very welcoming of our products.
CXOToday: How technologically driven are you? Or how is technology helping you to gain the extra edge?
Angrish: We are able to solve existing problems with the application of new tools, and in some places, are able to completely revamp legacy processes using smarter and faster techniques. As such, the office of the CTO is involved in each and every function in the company, not just the writing of software. AI (Artificial Intelligence) and ML (Machine Learning) aren’t just buzz words for us. All processes within Capital Float are machine assisted at least, with some processes being machine driven end-to-end. We use data to learn and then deploy the new learnings and iterate. And to make the best decisions, we tap into as many data sources as we can; transaction platforms of partners, databases like bureaus and ROC/MCA, Aadhaar and the India Stack infrastructure, social media, etc.
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