Digital lender Capital Float raises $15 mn from returning investors

Working capital lender for small and medium enterprises (SMEs) Capital Float has raised $15 million in an equity capital round from returning investors Ribbit Capital, Amazon, SAIF Partners and Sequoia Capital India.

The growth round, dubbed Series E2 according to the company’s latest filings, takes the total equity capital raised by the holding company, Capfloat Financial Services, to $125 million to date, according to a statement. 

This is in addition to the $300 million raised in debt funding, it added.

It claims to have a customer base across 300 cities in the country, with a strong demand from tier 2 and tier 3 cities for SME loans. The company has disbursed over $1.2 billion to five lakh customers, it added. 

For the consumer lending vertical, Capital Float offers checkout financing products on Amazon's online platform. Amazon is also an investor in the company.

The company, which has a non-banking financial companies license, will continue to lend on its books, it said. In January, it partnered with Tokyo headquartered financial services company Credit Saison and Pune-based NBFC Poonawalla Finance to push the co-lending model for SMEs.

When it was founded in 2013 by Sashank Rishyasringa and Gaurav Hinduja, Capital Float was a working capital lender to MSMEs. It added the consumer lending vertical in 2017 and acquired personal finance app Walnut for $30 million in 2018 to bolster consumer play.

“At a time when the industry is faced with multiple challenges, we are grateful for this reinforcement and want to continue making lending effortless for SMEs and consumers across the nation. We’re eager to significantly increase our lending capacity once the lockdown is lifted to enable SME growth and consumer spending at scale,” Hinduja and Rishyasringa said.

The infusion comes at a time when NBFCs have not been given relief under the three month moratorium by banks for repayment of loans in view of the Covid-19 lockdown. In this scenario, NBFCs will have to continue to pay banks from which they have taken loans, while their customers benefit from the moratorium. 

Prior to this, NBFCs faced a liquidity crunch due to the Infrastructure Leasing & Financial Services (IL&FS) crisis, when mutual funds stopped refinancing loans. 

Capital Float has been in talks to raise $150 million for over a year, according to media reports. In 2019, financial daily Mint reported that a conversation with Naspers-owned PayU for investment had fallen through, while ET Prime, the digital content platform of The Economic Times, reported in November that the company had shuttered its consumer focused business. 

Earlier this month, Aye Finance, an NBFC that lends to micro enterprises, raised $23.8 million in debt from 15 lenders in India and abroad in order to continue operations.