LenDenClub, the fastest-growing peer to peer (P2P) lending platform in India, has raised a Pre-Series A funding of $1 million led by Artha Venture Fund, a micro VC fund that invests in early-stage companies.
The round also saw participation from several family offices like the UAE-based Transworld Group, and marquee angel investors Shuchi Kothari, Ramakant Sharma, Narendra Karnavat, Nandi Mehta. Previous investors also participated in the current round.
LenDenClub offers small ticket loans directly to lenders from over 150 cities. They started in 2016, disbursing 1 loan a day and, within a short span of 3 years,they have grown to 150 loans/day. Their fast growth is attributed to the runaway success of LenDenClub’s InstaMoney platform. InstaMoney services a gap that banks and NBFCs cannot fulfill – providing small-ticket loans disbursed into the bank accounts of salaried individuals within 24 hours.
LenDenClub leverages its proprietary tech-stack to reduce the time taken to underwrite a loan. Loans that meet the minimum preset qualification criteria get approved within 5 minutes and those that are rejected are underwritten by a back-end team with a 2-hour turnaround on the lending decision. The approved borrower profiles go live on a special lender app where over 10,000 active lenders choose whom they want to lend to.
Late in 2018, a lender survey revealed that fierce competition for LenDenClub’s loans had left many lenders without enough opportunities to deploy the funds in their lender accounts. To resolve this problem, LenDenClub’s tech team developed an auto-invest feature.The feature allows the investor to choose from over 40+ criteria provided by borrowers.The criteria include utilization of funds, tenure of loan and even whether the borrower’s residence is self-owned or rented.
The funds from the lender’s account are auto invested if the borrower’s profile meet the criteria set by the lender. Over 70% of lenders activated this feature and its success can be gauged by LenDenClub founder, Bhavin Patel’s claim that 100% of all borrower profiles that have gone live on the platform have been funded.
LenDenClub makes revenues through registration fees and success fees charged to lenders and borrowers. Currently, it is operating in just 6 states with more than half a million individuals registered on the platform, disbursing 50,000+ P2P loans, and managing a loan book of Rs. 60 crores that is growing almost 20% month on month over the last 12 months. It intends on utilizing the $1 million fundraise to expand its senior management team, develop innovative lending products and expanding its geographical reach to 12 states.
Bhavin Patel, Co-Founder & CEO, LenDenClub said, “The current funding round gives us the ability to double our reach and continue our quest in finding creditworthy borrowers that are not being serviced by the current financial institutions. We also aim to double the number of lenders on the platform to reach Rs.500 crores disbursal in the next 18 months.”
LenDenClub was Artha Venture Fund’s first investment and is also their first follow-on investment from the same fund. The fund’s Managing Partner, Anirudh A Damani said that, “P2P lending truly democratizes the lending ecosystem in India by removing the middlemen i.e. the NBFC’s and banks that have successfully credit-starved the Indian consumer. Their spectacular growth in lender registrations and money disbursed is even more heartening at a time wherein the entire lending ecosystem is petitioning the government for a bailout. There may not be a better poster boy for the success of P2P in India!”
The fund’s Growth Partner, Vinod Keni, also added, “LenDenClub’s solution of directly connecting individual lenders to borrowers has been a resounding success. It has, no doubt, been a pleasure to work with LenDenClub in their journey of making P2P platforms tantamount to the banking ecosystem in India.”
LenDenClub is the new-age P2P platform aims to foster financial inclusion by leveraging technology to support borrowers with hassle-free loans, even in the remotest parts of the country, while providing a new age investment option for lenders. LenDenClub currently enjoys a user base of over half a million and disbursing 50,000 loans per year. While the lenders at the platform are spread all across India to even NRIs, the borrowers are currently active in 6 states of the country. The platform has 100% funding record for its borrowers.
Artha Venture Fund is a micro VC fund that invests in early-stage companies, with follow-on investments up to Series A. The fund thematically invests into consumption, consumption enablers and B2B. The fund made its second close in July 2019 at Rs. 100 crores with a portfolio of 6 companies: LenDenClub, Haazri, KabaddiAdda, Jadooz, Daalchini and Everest Fleet.