NeoGrwoth, an RBI-registered non-banking financial company (NBFC), has raised $10 million in debt capital from US-based global investment firm Microvest Capital Management. The new funding comes one month after NeoGrowth raised $36.2 million in its Series D as equity investment from the Dutch development bank FMO and existing investors.
With 19 years of experience investing in microfinance organizations and small and medium-sized businesses, Microvest is an impact investor. As an asset manager, it distributes private debt capital to lenders with a commitment to responsible microfinance and SME financing.
“Through this loan, we are leveraging both of our organizations’ synergies to achieve meaningful scale and contribute to the sustainable development goals,” said Microvest chief executive Joshua Moraczewski.
Microvest has given more than $1 billion to more than 200 financial institutions in 60 emerging and frontier nations since its founding in 2003. Neogrowth, a small business-focused digital lender, plans to deploy the new proceeds to expand its India footprint while aiming to raise more growth capital.
NeoGrowth provides loans to small businesses in 25 sites across India
Co-founded by Dhruv and Piyush Khaitan, Mumbai-based NeoGrowth has a decade-long experience funding SMEs. The digital-lending startup asserted to have provided approximately 1,50,000 micro, small, and medium-sized businesses (MSMEs) with connections and disbursed close to $1 billion in loans since its start.
“The company is dedicated to funding India’s small businesses using the digital payments ecosystem. The funding will be used to help the growth of MSMEs and integrate them into the mainstream financing ecosystem,” said Arun Nayyar, managing director and chief executive at NeoGrowth.
Based on an analysis of digital transactions and cash flow to determine the company’s health, NeoGrowth provides loans to small businesses. It operates out of about 25 sites across India and offers loans to MSMEs in various markets. Additionally, it emphasizes financial inclusion for small businesses that are underserved, women company owners, and first-time entrepreneurs.
The Covid-19 outbreak significantly impacted NeoGrowth’s expenditures since lockdowns forced small and medium-sized businesses to close.
After the Covid-19 second wave subsided and sales picked up again, the startup is expanding at a pace of about 3 to 3.5 percent month over month, equating to an annualized growth rate of nearly 40 percent.
The fintech company focusing on small businesses would aim for a 30 to 40 percent loan growth during FY23. The Mumbai-based lender assets under management are INR 1,559 crore as of March end.