NeoGrowth Credit Pvt Ltd has raised a $47 million (Rs.300 Crores) investment round led by LeapFrog Investments. Existing investors Aspada Investment Co and Quona Capital also participated. NeoGrowth, of Mumbia, provides business loans in India.
LEAPFROG LEADS $47 MILLION INVESTMENT IN INDIA’S NEOGROWTH – THE DIGITAL LENDING LEADER
New category of lending for small and medium-sized enterprises with underwriting based on digital payment transaction data
· LeapFrog Investments has led a $47m investment in NeoGrowth, with existing investors Aspada Investment Company and Quona Capital also participating
· The company has pioneered a new category of lending by underwriting digital payment transaction data, generated by small and medium sized businesses
· These smaller enterprises constitute 99% of all companies in India and contribute to 30% of GDP – but they lack access to finance (80% are currently self-financed)
· NeoGrowth joins LeapFrog’s portfolio of fast-growth, emerging-market digital financial companies, including category-leaders WorldRemit, Cignifi, Fincare, BIMA Mobile and AllLife
London, 24 January 2017 – LeapFrog Investments, the dedicated equity investor in financial services and healthcare for emerging consumers, has led a $47 million (Rs.300 Crores) investment round in NeoGrowth Credit Pvt Ltd, the leading digital financial lender. Existing investors Aspada Investment Company and Quona Capital also participated. The company was featured among the Top 50 Emerging Market fintech firms in the world in the Fintech 100 Report 2017 by KPMG & H2 ventures.
NeoGrowth has pioneered a new category of lending for small and medium business owners based on analysing and underwriting digital payments data generated from daily sales. This approach revolutionises small business lending, making it possible for merchants who are unable to secure loans from traditional banks, to access a NeoGrowth loan. Flexible, small, daily automated repayments are also one of the hallmarks of the business.
Michael Fernandes, Partner at LeapFrog, who led the investment, joins NeoGrowth’s Board of Directors. “India is at an inflexion point as the rise of cashless financial services, harnessing big data, transforms the lives of millions of emerging consumers,” he commented. “NeoGrowth is at the forefront of this transformation. By providing loans to underserved merchants against their future digital sales, it unlocks credit that is tailored to their business requirements, which in turn inspires growth and job creation.”
Traditional underwriting methods in India exclude a large proportion of small and medium enterprises who lack basic-level documentation which are required by banks and traditional lending sources. Lack of access to finance is one of the biggest constraints to growth for these businesses and 80% are currently self-financed.
“The digital lending space is even larger than we had imagined, providing substantial opportunity in a market that NeoGrowth leads,” said PK Khaitan, Managing Director, NeoGrowth Credit Pvt. Ltd. “We are delighted to be embarking on this next expansion phase with LeapFrog, given its exceptional experience in assisting growth among fintech pioneers through technological innovation and market expansion.”
The company’s business model benefits from the Indian government’s demonetisation initiative which has boosted adoption of digital payment methods. Data from the Reserve Bank of India indicates that the value of point-of-sale transactions made monthly rose substantially to INR740bn ($11.6bn) in September 2017, equating to an 85% increase year-on-year.
With the investment, NeoGrowth plans to capitalise on its market-leading technology to significantly expand lending to small business owners, reaching deeper into India’s largest cities, and expand to other urban areas.
According to the World Bank, India is set to regain its status as the world’s fastest growing economy in 2019 seeing it as a market with “enormous growth potential” due to the government’s ambitious reforms.
NeoGrowth joins LeapFrog’s portfolio of leading emerging market digital financial services companies, including WorldRemit the digital money transfer leader, Fincare, one of India’s largest and fastest-growing digital banking platforms, Cignifi, an innovative fintech firm that has credit scored more than 150 million emerging consumers via mobile phone data, AllLife, the pioneering life insurer using a continuous underwriting approach to deliver life insurance for those living with HIV or diabetes, and BIMA Mobile, the leading emerging markets mobile insurer with sales of over 30 million policies to low income consumers.
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About Leapfrog Investments
LeapFrog invests in extraordinary businesses in Africa and Asia. We partner with their leaders to achieve leaps of growth, profitability and impact. LeapFrog companies now operate across 33 markets and reach 117 million people. Over 97.5 million people are emerging consumers, often accessing insurance, savings, pensions, credit and healthcare for the first time. We call this distinctive approach “profit with purpose”, because it generates strong results and changes many lives. Leading global investors share this vision and have invested and committed a billion dollars to LeapFrog. LeapFrog is the winner of Private Equity International (PEI) Firm of the Year Africa, and is ranked by Fortune as one of the top five companies changing the world. @leapfroginvest
NeoGrowth is a pioneer in lending based on the underwriting of digital payments data. The Company’s proprietary technology platform offers unsecured loans to merchants who accept card or other digital payments from customers. Flexible repayment is a hallmark of the NeoGrowth business, offering customers small daily auto-repayment from card-based sales. At the heart of the NeoGrowth business strategy is a mission to have a positive social impact on the financial lives of small and medium business merchants across India, more than 50% of whom are creditworthy but until now have been excluded from accessing loans based on traditional underwriting methods. Addressing this gap in the market is the basis on which the NeoGrowth business has been built. The company is backed by Omidyar Network, Aspada Investment Company, Khosla Impact and Accion Frontier Inclusion Fund (AFIF)- Mauritius, IIFL Seed Ventures Fund I LeapFrog Investments.