How 3 CAs and a tech guy built India’s leading digital lending platform 'FlexiLoans' to serve the underbanked at a click

  • Hi, I am Manish Lunia, a Chartered Accountant, and entrepreneur from India.
  • In 2015, while holding senior management positions in India’s top business institutions, Ritesh, Deepak, and I (three entrepreneurial CA’s) decided to co-found FlexiLoans.com with our buddy Abhishek Kothari, an IIT Grad.
  • We spent about a year working together on ideas, built a bond and trust amongst ourselves, and then finally took the plunge.
  • FlexiLoans.com is a digital lending platform that started as a 4 member team and today has grown to more than 200 employees. We have disbursed more than 30,000 loans in over 1400 cities and raised over $100 Mn in Equity and Debt funding.
  • Here is our story.

Back story: An MBA - that changed everything

I grew up in Ahmedabad, India and aspired to become a CA, one of the most coveted professions of our time.

Fast forward to 2002, I qualified as a CA, and an All India Rank in CA exams led me to get selected at an Indian public sector oil and gas company in the Treasury & Policy team in Mumbai.

While working for 6 years in varied Finance functions, I was constantly intrigued by the fact that most CXO positions were held by people with MBAs! I wanted to learn what it entailed and so, I decided to do an MBA in 2008.

Just like me, Ritesh my fellow CA and now co-founder wanted to build on his international experience and took his MBA journey to further his corporate growth. With formidable domestic and international experience, Ritesh has worked in unique domains of revenue assurance, telecom technology interfaces, as well as internal audits.

Deepak Jain, also a fellow CA and now co-founder, wanted to join the global investment banking domain and an MBA was a segway to it. As a flamboyant investment banker, Deepak has travelled across the world and India, raising funds for large Indian banks and corporations.

In short, we were all doing well in our corporate careers and an MBA was our plan to further our corporate career and learning curve.

As luck would have it, we all enrolled for an MBA the same year (2008-2009) at the Indian School of Business, and our time together transpired into a lifelong friendship.

(Ritesh and I, have been friends for almost 2 decades now and worked in the same organization for 5 years pre MBA.)

Bitten by the entrepreneurial bug & coming up with a business idea

Growing up I was always inspired to be an entrepreneur and as a kid enjoyed contributing to my father's MSME business, doing multiple roles. But after completing my MBA, my desire to start something of my own was at its peak.

From 2009 onwards I was working in various leadership roles at the Aditya Birla Group’s financial services, Corporate Finance verticals. Here I gained the wisdom to bring strategy to execution and the calling got stronger.

So was it with - Ritesh and Deepak.

Ritesh was the CFO of a famous funded Indian Startup Housing.com and Deepak who was born to a jeweller in Mumbai, his first love has always been the entrepreneurial path.

But the big question was - what idea should we pursue?

Finally, after ideating hundreds of ideas over the years and even seriously working on a few but we fell in love with the MSME Lending idea!

As a matter of fact, 80% of SME loan proposals are rejected by financial institutions due to a lack of financial documents and assets. Furthermore, 30 odd million of India’s deserving MSMEs are under-served for a lack of data that can be used to assess their creditworthiness.

Considering the high impact potential in the space, amazing levels of technological and entrepreneurial changes in India at that time, and our familiarity with the finance domain, the idea seemed perfect.

What next?

Resigning from our senior management roles (with no funding)

With a solid idea formed, we sought feedback from friends and networks, which was immensely helpful in validating our idea.

We knew that we were building a technology-backed financial services company from day one and thus what was missing was a Technology partner!

When Deepak was visiting London in 2015 he discussed the idea with Abhishek, our ISB classmate and an IIT-Mumbai grad who was working with one of the leading data science companies in the world of financial services.

He agreed to join forces and we came together for an ideal collaboration to make the best Fintech company that we all dreamed of.

By now, we had spent some amount of time ideating the ground blocks however we were still working at our respective organizations and had to move forward.

I clearly remember somewhere in Dec'15, when Ritesh remarked that 'we should either jump in and pursue FlexiLoans 100% or, don't do it at all else we would continue being Wanna’preneurs.'

This made us realize that it was time to give our 100% commitment and one by one in a period of 6 months each of us quit our jobs to start FlexiLoans.com - a digital lending platform.

From no funding to raising one of the largest first rounds of funding in India

Once we resigned, we immediately got our company registered, did high levels of market research and a basic working website was commissioned.

We started our journey by joining an accelerator – 'Zone Start-ups India' at the iconic Bombay Stock Exchange. Here we got much-needed access to an amazing workspace, a network of fellow entrepreneurs and friends who helped us to connect with multiple investors.

(There are many accelerators in the country as well as shared office spaces that give amazing amenities and a network for budding start-ups. We did not know about this until we started.)

We even approached a few investors during the idea stage but with limited success. So we decided to contribute the initial funding from our savings to kick start developments at FlexiLoans.

In fact, we disbursed over 300 loans and partnered with various large ecosystems before approaching investors for fundraising.

In October 2016, we secured the highest seed funding ever of about Rs. 100 crs from a clutch of marquee investors like Sanjay Nayar, CEO -KKR India, Anil Jaggia – Ex CIO HDFC Bank, Vikram Sud, Ex-COO Citi Asia and Kotak Mahindra Bank amongst others, everything moved to the next level from thereon.

Keeping our network of bankers/mentors posted on key developments at FlexiLoans was a key reason to get a reverse inquiry and close such a large fundraise at an initial stage.

Since then, we have gone through several worthy experiences of entrepreneurial life and continue to pursue our mission.

Overcoming obstacles

There are challenges at every stage during the start-up journey.

From our first employee resigning even before he joined us full time to our first NBFC partnership falling through a week before our projected launch, to hundreds of un-successful investor meetings.

As though that was not enough of a challenge, India went through a series of events such as demonetization, GST roll-out, PNB Crisis/ ILFS crisis and now Covid-19. All of these events had a huge impact on the MSME segment, directly impacting our customers.

Amidst all of this, a strong foundation, a clear target market, an amazing team behind us as well as our friendship kept us scaling these challenges, so far.

Business model & growth

At FlexiLoans.com the whole borrowing journey for a small MSME is completely digital, technological aided guidance and information sharing where loans are approved within 48 hours. We are close to making it real-time, a first in MSME lending.

Our platform uses advanced credit decisioning rules when analyzing lending proposals and captures unique datapoints that traditional entities don’t possess, analyze or store. This opens up a unique market proposition and expands the Market of lending-worthy consumers.

FlexiLoans assists MSME’s who were not able to obtain loans through conventional banks and financial institutions due to their lack of credit history, documentation, or reach.

Our customers have digital footprints at e-commerce websites, payment gateways, transacting platforms which we use when making decisions on credit decisioning which are truly independent, real-time, and full of insights.

Over the last 4 years, we have provided over 30, 000 loans in more than 1,400 cities and towns in India, a feat that’s rare and that gives us an unparalleled brand and reach.

Our 100+ ecosystem partnerships with India’s leading Ecommerce website, payment gateways, food tech, pharmacy and supply chain ecosystems give us access to over 20 million businesses while we get over 2,00,000 new applications on a monthly basis for loans, on our website and mobile apps making our digital interfaces accessed more than even large NBFCs and Banks of the country.

We have also launched a new touchless disbursement which is virtually real-time.

FlexiLoans aims to empower the Indian MSMEs as their power to unleash the huge potential that the Businesses have and empower their transaction, accounting and multiple financial needs along the way.

Timeline of our growth journey

2016

  • We started with modest loan disbursements of Rs. 6-10 lacs per month for the first 6 months while learning repayment trends, processes, new partnership onboarding and building technology on the go.
  • We loved working with a lot of interns who were CA aspirants, some CAs who were on a break for their MBA preparation, as wells as many tech and marketing resources. This helped us optimize expenses and at the same time get good professional help in our early growth.
  • Over 100 candidates have interned with FlexiLoans in the last 4 years many of whom have continued to stay with us as employees later.

2017

  • This was a true growth phase. In 2017 we grew ten times in monthly disbursements, as well as from a team of 15 people to a team of 100+ professionals.
  • It was a period of hustle, chaos, excitement and the results got the teams charged. These were periods of GST roll-outs, fall out of demonetization degrowth and the rising digital economy in India.
  • Through all this, we stayed true to our vision.

2018

  • Our growth significantly increased again, by 300% that of 2017.
  • Technology and data science models took shape, partner network expanded and our team grew to over 200 people.
  • We moved into a lovely new office. We were also certified as a 'Great Place To Work'.
  • Our product and tech offerings continued improving.
  • We took some bold decisions to stop certain verticals that didn’t show good initial results and pivot into something more granular and aligned to our vision.

2019

  • Was a humbling experience where we had to moderate our growth expectations due to the liquidity squeeze owing to the ILFS crisis. However, we learnt many great liability management tricks and methods that stead us well today.
  • Built our co-lending vertical that holds immense value in our business today with over half a dozen banks and financial institutions working with us in expanding the digitally seamless lending to borrowers across India.

2020

  • This year humbled us and the world alike. We had to take major decisions that were unprecedented, learnt to keep our teams involved and raised our new debt and equity funding round of INR 150 Crores from investors of the Nayar Family office, amongst others.
  • We have engaged with our customers like never before in this journey and learnt lots that will help us in our scale and credit journey from here on.

Wrapping Up…

FlexiLoans.com is a baby that we have jointly raised and it has been one of the most satisfying personal and professionals experiences.

I think sustained and successful entrepreneurship needs a purpose that is close to one’s heart and there are so many areas in the field of finance that need some young minds to come and solve. For instance, millennials will bank very differently just like they shop differently on e-commerce and start-ups should aim to address that generational gap between existing banking and future needs!

So, if you have an idea that you believe in, do give it a shot! There has never been a better time to do it…

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