FMO leads $36.3 mn Series D round in MSME lender NeoGrowth
Mumbai-based non-bank lender NeoGrowth said Thursday it has raised Rs 160 crore, or nearly $20 million, from Dutch development finance institution FMO.
Existing investors also participated in the funding round, taking the total amount raised to around Rs 300 crore.
This comes four months after The Capital Quest first reported that NeoGrowth was set to bring in FMO into the cap table.
With this new investment, the LeapFrog-backed company intends to expand into new markets, strengthen its foothold in existing ones, and accelerate innovation in its digitally enabled products.
Arun Nayyar, Managing Director and CEO, NeoGrowth, said: “We believe that this fresh funding from FMO will enable us to accelerate our growth by leveraging our robust business model. We are confident that we will enable more small business owners – that have historically been denied formal credit to fuel their growth aspirations with our financially inclusive lending solutions.”
Peter Maila, FMO Co-Chief Investment Officer, said: “We invested in NeoGrowth not only because they are a propellent of financial inclusion by serving an underserved SME community through their unique digital products and underwriting capabilities, but also because they fit perfectly well within our ambitions of reducing inequalities in a key market such as India.”
NeoGrowth has been FMO’s debt client since 2017 and previously raised around Rs 280 crore in debt capital from the firm.
In 2018, it had raised Rs 300 crore in a round led by impact investor LeapFrog Investments. Existing investors Aspada Investment Company and Quona Capital also contributed to the fundraising through Accion Frontier Inclusion Fund, which focuses on inclusive financial technology.
The company had also attracted capital from Omidyar, Khosla Impact, Flourish Ventures and IIFL, besides debt from Proparco and Oikocredit, in the past.
NeoGrowth was established in 2013 and started operations a year later. The company provides loans against future credit and debit card sales of small and medium-sized retailers who use point-of-sale swiping machines. The loans are a percentage of the card sales of a shop and have a duration of between six months and two years. Clients repay their loans as a percentage of their monthly card sales.
NeoGrowth has Rs 1,600 crore in assets under management. The company has connected with over 1.5 lakh MSMEs since its inception and disbursed over $1 billion in loans. The company says it has been profitable for the last four consecutive quarters.
For the year ended March 31, 2022, its total revenue from operations was pegged at Rs 358 crore as against Rs 307 crore in FY21. Its net loss in the period declined to Rs 39.45 crore from Rs 42 crore.