Aye Finance raises $16.75 mn from German impact investor

Technology focused non-banking financial company (NBFC) Aye Finance has raised $16.75 million in a debt funding round from Frankfurt headquartered impact investor, Invest in Visions. 

The Gurugram-based company will use the fresh capital to lend to enterprises in the micro sector, a statement said.

On June 25, Aye Finance said it raised $28 million in a Series E funding round from LGT Lightstone, Falcon Edge, A91 Partners, asset management firm MAJ Invest and CapitalG. A month before that, it raised $24 million in debt from undisclosed lenders in India and abroad.

In January, Accion, an impact investor and one of the early investors in Aye Finance, sold its stake to A91 Partners and exited the company. In November last year, Dutch development finance institution FMO and another impact investor infused $17.4 million in Aye Finance via debt. 

Including the latest capital infusion, Aye Finance has so far raised $361 million -- $93 million in equity and the rest in debt, the company said. 

“Since our inception in 2014, we have been making affordable loans a reality for the historically credit starved micro enterprises of India. Access to adequate capital has never been more significant than in these current times of economic disruptions and we are committed to supporting these grassroots businesses through these trying times as well with our loan offerings,” Sanjay Sharma, managing director of Aye Finance, said. 

Since inception, Aye Finance claims to have disbursed over Rs 3,000 crore to more than 2,00,000 unorganised businesses. It has expanded its offerings to micro enterprises, which are generally at the bottom of the micro, small and medium enterprises (MSME) hierarchy, to ensure financial inclusion. It offers loan products such as mortgage, hypothecation and term loans.

Founded by former Sequoia Capital India executives Sanjay Sharma and Vikram Jaitley, Aye Finance has a presence in 18 states. The company uses platforms that offer creditworthiness and predictive artificial intelligence (AI)-driven data models to provide loans to the underserved sector.

On the other hand, Invest in Visions, founded by Edda Schröder in 2006, offers financial aid to small and marginalised businesses from the healthcare, education and social housing sectors. Through its IIV Mikrofinanzfonds fund, which was launched in 2011, the company provides retail investors an opportunity to participate in impact investments along with institutional investors. 

The average size of the loans is about €3 million, with a tenure of about 19 months. Typical borrowers include vegetable sellers, dressmakers, cattle farmers and craftspeople. Invest in Visions also has advisor partners such as Incofin Investment Management,  Developing World Markets (DWM) and Agents for Impact.