Gurgaon-based Aye Finance, a provider of loans to small businesses, has raised $21.5 million (~₹145.2 crore) in its Series C round led by CapitalG (formerly Google Capital), the venture capital fund owned by Google'a parent Alphabet Inc., reported LiveMint.

Other investors who also participated in this round includes existing investors SAIF Partners and LGT, who were part of a $10.5 million investment in 2016.

The startup will use the freshly raised funds into business operations and technology. Till date, Aye Finance has raised a total of $68.4 million in ten different funding rounds.

Founded in 2014 by Sanjay Sharma and Vikram Jetley, Aye Finance is a non-banking financial company (NBFC) that provides mortgage, hypothecation, and term loan services to micro, small and medium enterprises (MSMEs). It has 72 branches in 10 states across India.

Aye Finance offers micro-loans to small businesses in India that are not on the radar of banks and traditional financing companies, and also don’t qualify for programs run by the likes of Flipkart and Amazon.

Till date, Aye Finance has disbursed more than ₹500 crore to 60,000 small and medium businesses. It also claims to have around ₹350 crore in assets under management (AUM).

“CapitalG’s access to Google expertise in scaling businesses using analytics and technology will strongly supplement our approach. We intend to cover the large unaddressed MSME finance market that other finance providers have found difficult to service,” said Sanjay Sharma, managing director, Aye Finance in a statement.

According to Kaushik Anand, India head of CapitalG, MSMEs form the backbone of the Indian economy since they contribute a large portion of its GDP; however, they lack access to formal credit.

“Over the last few years, Aye has proven that their model is one of the most efficient ways to deliver credit to underserved MSMEs across industry clusters. We look forward to working with Aye and helping them use technology to address under-penetrated segments of the MSME credit market,” added Anand.

Notably, Aye Finance is second investment of CapitalG in India as earlier, in January 2017 it participated in $15 million funding round of Bangalore-based Cuemath, an after-school maths learning startup. Earlier, when CapitalG was Google Capital, it had invested in India's health-tech startup Practo.

In India, Google made its first direct investment in an Indian startup, picking up a minority stake in Bengaluru-based hyper-local concierge and delivery startup Dunzo.

Alphabet has three main investment arms through which it keep investing in startups built beyond the Googleplex, including GV, CapitalG (formerly Google Capital) and Gradient Ventures, a VC fund focused on artificial intelligence, as well as strategic investments made out of its corporate arm and individual business units.

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