Debt Marketplace CredAvenue Crosses USD 1 Billion Valuation, Turns Unicorn

Chennai-based unified lending infrastructure and online debt marketplace CredAvenue has raised USD 137 Million in a Series B funding round led by New York headquartered global private equity and venture capital firm Insight Partners, B Capital Group, Dragoneer and existing investors, say media reports. With this investment, CredAvenue has joined the elite unicorn club, comprising startups that have crossed the USD 1 Billion valuation threshold.   

According to the latest count, as on February 9, 2022, India has 88 unicorns, with a combined valuation of USD 294.99 Billion, with 2021 alone giving rise to 44 of them, says this report in the Invest India portal. CredAvenue is one of the fastest startups to turn unicorn - within 18 months of inception, the company claimed.  

With over 750 active lenders, including major public sector banks and more 2000 enterprises listed on the platform, CredAvenue’s unified product suite has five products, including co-lending, working capital and term loans with fully digitised lifecycles, an AI powered securitisation platform, bonds and supply chain finance, says the company’s website. As of date, the company has disbursed loans worth USD 10 Billon.   

What sets CredAvenue apart from its competitors is the seamless interoperability across its five functionalities, built with a comprehensive technology that oversees the entire debt cycle from disbursal to collection, CEO Gaurav Kumar said in an interview with the news portal TechCrunch.   

The startup is priming to emerge as a leader in the USD 1.9 Trillion debt market in India, a heretofore underutilised route to finance. One of the reasons stellar rise of unicorns in 2021 could be the rising importance of debt financing as a main source of capital, given the shrinking of credit since the financial crisis of 2018-19, brought on by the infamous collapse of IL&FS Group.   

A report in CNBC TV 18 says that more than USD 6 Million were raised through debt funding last year to avoid equity dilution, meet working capital requirements and pave the path for credit-based leding offerings. However, this is barely ‘scratching the surface’ of the debt marketplace in India, Kumar told TechCrunch. This is why the startup, despite having global ambitions, is looking to funnel the additional investment in expanding its India operations, and acquire companies to grow inorganically, he said.   

CredAvenue caters to MSMEs through its loan and co-lending platforms. Through CredLoans, MSMEs can take advantage of finding the right borrower through an Artificial Intelligence and Machine Learning powered tool known as CredMatch.   

The CredAutomate and CredAnalytics suites enable a disbursal rate that is five times faster than conventional turnaround times. Given the high interoperability on the platform MSME borrowers can access multiple debit instruments at the same time, to find the customise their loan portfolio. The startup provides MSME loans ranging from INR 5 to INR 500 Crores, for loan periods ranging from three months to 180 months, the company’s website says.  

To be eligible, MSMEs must be operational for six months before the loan application date, with a turnover of INR 90,000 in the immediate three months before the said date. MSMEs must not be on a negative location list or blacklisted on the SBA finance list and must not be a Trust or an NGO.   

In 2021, CredAvenue’s parent company Vivriti Capital had tied up with fintech company FlexiLoans to provide working capital loans worth INR 300 Crores to the MSME sector through the co-lending route. Loans under this arrangement are approved in 24-48 hours without manual intervention, said a report in The Economic Times.