Indian fintech startup PhoneParLoan, which connects customers to lenders primarily in tier II and III cities, has raised an undisclosed amount of funding from accelerator MOX, its co-founder Ashwin Bhambri told DealStreetAsia.
MOX is operated by SOSV, a US-based venture capital firm with over $700 million under management. The PhoneParLoan investment marks SOSV’s second capital infusion in the startup currently valued at $7 million. It earlier invested in the startup in January 2019, along with a slew of Japanese and Chinese investors. Prior to that, the company also garnered funding from a few angel investors.
Although the current investment figure is small, it highlights a growing market in India for online lenders to cater to salaried individuals across the country.
PhoneParLoan, which literally means a loan on a phone, doles out short tenure microloans in the range of Rs 1000 to Rs 10,000. According to estimates available, there are currently as many as 300 million low-and-middle-income salaried workers who often feel a cash crunch during the end of the month and need micro-credit to pay for their basic expenses such as groceries and bill payments.
The short tenure credit market in the country, Bhambri said, currently stands at Rs 70,000 crore and is expected to grow at 14 per cent year-on-year.
PhoneParLoan, established in 2015 under parent firm Millennial Card Technologies, addresses this contactless lending sector. For retail borrowers, it unifies the loan application process wherein it creates a single loan application on its platform that is accepted and consumed through APIs of multiple lenders.
The benefit for the lender – be it a fintech startup, a non-banking finance company (NBFC) or a bank – lies in its getting access to a pool of ready-to-disburse customers with all details at a zero-acquisition cost. PhoneParLoan also claims to have an alternate data credit scorecard for the new-to-credit or thin file users that can be used by multiple lenders for credit decisions.
Other startups operating in the segment are Creditbazzar.com and QuickCredit.in, among others.
The corpus raised will help PhoneParLoan spruce up its technology, ramp up headcount and expand its operation, said Bhambri. “The idea is to reduce the friction between consumers and lenders,” he added.
“The profit-participating loan application is quite unique as it is complementary to both the borrower and the lender. India is the best testing ground for such a product and has global scalability,” said Anand Kumar, a corporate lawyer with Pier Counsel, who has invested in the startup in his personal capacity.
New Jersey-based SOSV is no stranger to the burgeoning Indian startup ecosystem. According to media reports, it has made 20 investments in India over the past three years and has plans to clinch at least 15 deals over the course of this year.