Flexiloans, a digital lending platform specializing in small business financing, is currently engaged in discussions with both international and domestic investors to raise approximately Rs 300 crore ($35 million) in a new equity round. Sources familiar with the negotiations have indicated that potential investors may include Accion, a US-based nonprofit dedicated to financial inclusion, and Fundamentum, an investment firm co-founded by Infosys cofounder Nandan Nilekani. This round of funding is expected to significantly boost Flexiloans’ valuation, potentially bringing it to around Rs 1,200 crore ($140 million), up from its previous valuation of Rs 700 crore.
Founded in 2016 by Indian School of Business alumni Deepak Jain, Ritesh Jain, Manish Lunia, and Abhishek Kothari, Flexiloans focuses on providing loans to small businesses through digital channels. The company, headquartered in Mumbai, competes with other digital lending platforms such as Indifi and Lendingkart. Sanjay Nayar, who led KKR in India for nearly a decade, is one of Flexiloans’ notable backers. Abhishek Kothari, one of the co-founders, later moved on to become the CEO of fintech platform Pepper Money India.
The fresh capital raised in this funding round is expected to be primarily utilized to strengthen Flexiloans’ lending business and support the acquisition of additional debt. This follows a significant equity infusion in 2022 when the company raised $30 million from Denmark-based MAJ Invest and other investors. The influx of funds comes at a critical time for the digital lending sector, which has been navigating numerous challenges following the Covid-19 pandemic.
The broader digital lending market has seen varied activity, with Indifi securing $35 million in equity last year and Lendingkart reportedly exploring a new equity round valued between $30 million and $50 million. Despite the overall slowdown in the unsecured consumer lending sector, small business-focused lenders like Flexiloans are attracting increasing attention. Investors are particularly interested in tech-enabled companies that demonstrate the ability to maintain strong asset quality, making them favorable prospects in a tough funding environment.
Flexiloans’ growth has been further supported by its partnership with the non-banking finance company Epimoney. According to a recent report by India Ratings & Research, Epimoney reported a net profit of Rs 14 crore for the first nine months of the last financial year. This marks a significant improvement from FY23, where the company recorded a net profit of Rs 6.7 crore, recovering from a loss of Rs 10 crore in FY22. The report also highlighted that Flexiloans’ assets under management are close to Rs 2,000 crore.
