Lending tech startup Aye Finance has raised a substantial debt funding of INR 250 Cr (around $30 million) from the Dutch entrepreneurial development bank FMO. This fresh capital infusion is set to bolster the company’s mission of providing financial support to underserved micro, small, and medium enterprises (MSMEs) across India.
Expanding Financial Inclusion for MSMEs
Aye Finance, founded in 2014 by Sanjay Sharma and Vikram Jetley, has established itself as a key player in the Indian fintech landscape by offering affordable business loans to micro enterprises. The startup leverages a unique cluster-based credit assessment model enhanced with AI algorithms, allowing it to accurately assess credit risk even in the absence of traditional business documentation.
To date, Aye Finance claims to have disbursed loans worth over INR 10,000 Cr to more than 8.67 lakh borrowers. This latest funding will enable the company to continue its mission of extending financial services to grassroots businesses, which are often overlooked by conventional banking institutions.
Strategic Investment and Growth
Commenting on the new funding, Krishnan Gopal, Chief Financial Officer of Aye Finance, highlighted the significance of this investment from FMO: “This latest funding from FMO will be instrumental in allowing us to rapidly scale our lending efforts and include the grassroots businesses that form the backbone of the Indian economy.”
This funding round follows several other significant investments in Aye Finance. In March, the startup raised INR 137 Cr in debt funding from German impact investment firm Invest in Visions. Additionally, in December last year, Aye Finance secured INR 310 Cr in a Series F funding round led by British International Investment (BII).
Overall, Aye Finance has raised over $380 million to date, underscoring its strong growth trajectory and the confidence investors have in its business model and mission.
Financial Performance and Market Outlook
Aye Finance’s financial performance has shown remarkable improvement. The startup reported a threefold increase in net profit year-on-year to INR 161 Cr for the financial year 2023-24 (FY24). Furthermore, its revenue from operations surged by 67% to INR 1,072 Cr, reflecting the company’s robust growth and operational efficiency.
Aye Finance operates in the rapidly expanding Indian fintech market, which is projected to reach $2.1 trillion by 2030. Within this market, the lending tech sector is expected to become a $1.3 trillion opportunity by the end of the decade, according to an Inc42 analysis.
Future Prospects
With this new influx of capital, Aye Finance is well-positioned to enhance its lending capabilities and broaden its reach to even more underserved MSMEs. The startup’s innovative use of technology and commitment to financial inclusion positions it as a transformative force in the Indian financial landscape.
As Aye Finance continues to scale and innovate, it aims to play a pivotal role in empowering India’s micro and small enterprises, driving economic growth and fostering financial inclusion across the nation.