Chennai-based fintech startup Prayaan Capital leverages an innovative ‘tech and touch’ model to meet the financial needs of underserved small businesses across India
CHENNAI, Feb. 20, 2020 /PRNewswire/ — Prayaan Capital Private Limited, a South India-based NBFC that lends to micro, small, and medium-sized enterprises (MSMEs) in India, today announced the closure of a USD $1.2 million seed investment round led by Accion Venture Lab, Accion’s seed-stage inclusive fintech investment initiative.
While access to credit for entrepreneurs in India is beginning to improve, there is still an estimated MSME credit gap of $400 billion, according to the IFC. Prayaan Capital works to meet this need through an innovative business model that leverages Brick & Mortar branches and both back-end & customer-facing digital tools in order to help small businesses digitize their operations and gain access to credit.
“With credit needs that are too small for traditional financial institutions and too large for microfinance lenders, many of India’s entrepreneurs remain unable to access the credit they need to sustain and grow their businesses. Accion Venture Lab exists to help inclusive fintech startups like Prayaan Capital leverage technology to meet this need,” said Accion President and CEO Michael Schlein. “With its innovative approach and strong, experienced team, Prayaan Capital is a welcome addition to our portfolio. The company not only helps entrepreneurs gain access to credit, but also helps accelerate the digital transformation of their businesses, leading to greater efficiency and growth,” said Tahira Dosani, Managing Director of Accion Venture Lab.
Accion Venture Lab provides capital and extensive support to innovative fintech startups that improve the reach, quality, and affordability of financial services for the underserved and have the potential to scale. Backed by commercial and impact investors since the launch of its third-party fund in 2019, Venture Lab has invested in more than 40 early-stage startups that operate in 30 countries worldwide.
Founded by two seasoned bankers, Madhan Mohan and Akash Chelvam, Prayaan Capital has strategically positioned its base in South India, which has a plethora of small scale manufacturers and unorganized tier 3 & 4 traders, all of whom are potential consumers of their products. With six operational branches in Tamil Nadu, Prayaan has already disbursed INR80 million to a varied customer base of small-scale entrepreneurs. Prayaan will use this new influx of capital to invest in technology and expand their operations.
Speaking on this milestone Madhan Mohan, MD & CEO of Prayaan Capital Private Limited, said, “We have a vision to make a difference for India’s MSMEs by providing a holistic financial journey that addresses all of their business needs and brings them into the formal financial ecosystem. We are excited to collaborate with Accion Venture Lab, which brings insights from its work with fintechs working to reach the underserved across four continents. We take Venture Lab’s investment as a sign of their confidence in our potential for continued growth and impact. We always keep our focus aligned to our customers and join each one on their financial journeys. Our aspiration is to be a ‘neighborhood lender’ to which these small businesses go for credit and other financial products. This latest milestone is the tip of the iceberg, and we expect continued growth and impact thanks to our innovative technology platform and value-add services.”
Prayaan Capital Private Limited was incorporated in December 2018, and was granted the NBFC Certificate of Registration in June 2019 for conducting business as a non-deposit-taking NBFC. The company has its Registered Office & Corporate Office in Chennai and its target segment is MSMEs in the manufacturing and services sector. Their target customers include small to medium sized stores, traders, and small manufacturing units. It offers small business loans from USD $1,500 to USD $30,000 and focuses on micro and small businesses, often referred to as the ‘missing middle’. This segment is not serviced by formal financial institutions, neither microfinance companies due to their small ticket size or by banks due to their need for documentation and higher ticket size.
Accion is a global nonprofit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and fintech impact investing. Accion catalyzes financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of – or poorly served by – the financial sector. For more than 50 years, Accion has helped tens of millions of people through our work with more than 110 partners in 50 countries. For further information, visit https://www.accion.org/venturelab.
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