Exclusive: Appiterate co-founder floats P2P lending startup

Tanuj Mendiratta, who quit Flipkart months after his previous venture Appiterate was acquired by the country's largest e-tailer, has started a peer-to-peer (P2P) marketplace that connects borrowers with lenders.

Christened Loancircle.in, the new financial technology venture uses unconventional data points about the borrower to increase predictability in the process of availing unsecured loans, Mendiratta told Techcircle.in.

"A potential borrower applies for a loan through Loancircle with his/her details such as education, employment, transactions, salary and so on. These details then go into our underwriting model and we recommend a yes/no on the loan request along with the loan amount, tenure and rate of interest to one of our lending partners, who takes a final decision on the loan," he added.

In other words, the one month-old startup, run by Bangalore-based Moneyvation Technologies Pvt Ltd, does not solely rely on the applicant's Credit Information Bureau (India) Ltd (CIBIL) score or credit history in firming lending recommendations.

Today, most lenders depend on a person's CIBIL score for deciding whether a request for credit should be approved. While CIBIL scores range from 300 to 900, statistics show that almost 60 per cent of loans go to those with a score above 750.

Industry watchers say many in the sub-750 category could be deemed credit-worthy if the parameters to assess them are expanded, an area of opportunity for technology players like Loancircle.

The additional data points fed into Loancircle's consumer lending platform ensure that the lender gets a deeper understanding of the borrower's risk profile. This leads to better credit decisions and lower probability of defaults, the benefits of which are passed on to the borrower in the form of lower interest rates, Mendiratta claims.

The startup is tying up with banks and NBFCs on the lending side. "The core IP in our offering is created through sourcing and underwriting capabilities," Mendiratta said.

Going forward, the company may either apply for a non-banking finance company (NBFC) licence or acquire an NBFC so that it can lend from its own books. "This will be useful in segments where traditional lenders are hesitant to invest but where our data model shows promise," he said.

As of now, Loancircle does not play in the SME lending space.

Armed with an MBA from IIM Calcutta and an engineering degree from Delhi School of Engineering, Mendiratta always had a keen interest in finance.

But for Mendiratta. the real push for Loancircle came from his understanding of the Indian consumer mindset at Appiterate, a startup he co-founded in 2013 along with Anuj Bhargva, Mayank Kumar and Varun Sharma. Mendiratta was CEO of SAIF Partners-backed Appiterate, which provides analytics and A/B testing solutions for Android and ioS apps, before it was acquired by Flipkart in March.

"Appiterate was a fairly short journey and the hunger to do something big is still alive. After exiting from Flipkart, I went back to the drawing board to see what my strengths and interest areas were," said Mendiratta.

Loancircle recently got a huge endorsement from Snapdeal co-founder and CEO Kunal Bahl on Twitter.

Good meeting @tanujme today. One of my favourite entrepreneurs. Excited about his next venture.

— Kunal Bahl (@1kunalbahl) August 31, 2015

Mendiratta said: "Kunal is a friend and an entrepreneur I greatly respect. I met him to take inputs and feedback on Loancircle."

As per VCCEdge, the research platform of VCCircle and techcircle.in, Bahl is one of India's most active angel investors with 12 reported deals to his credit since January 2014.

Loancircle, which already has the backing of an unnamed angel investor, would compete with startups such as Indialends, Faircent and others.

A few months ago, New Delhi-based IndiaLends raised an undisclosed amount in a pre-Series A round led by DSG Consumer Partners and angel investors such as Siddharth Parekh. In January, Gurgaon-based Fairassets Technologies, which is behind P2P lending marketplace Faircent, secured an undisclosed amount in funding from Devesh Sachdev and Ashish Tiwari (promoters of Fusion Microfinance Pvt Ltd) at an enterprise valuation of $4 million.

India's fintech space has become a preferred one for venture capitalists and young entrepreneurs. There is heightened investor interest in this sector as several startups are using technology to disrupt the country's current systems of lending, borrowing, personal finance and financial inclusion.

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