Fintech SaaS (Software as a Service) and tax filing platform Clear said on March 16 that it has acquired Gurugram-based supply chain financing tech platform Xpedize. This acquisition marks Clear’s foray into credit for Small and Medium Enterprises (SME) and business-to-business (B2B) payments.
While Clear did not disclose the amount of the acquisition, Moneycontrol learns that the deal amount stood at Rs 100 crore. This is the company's second acquisition after taking over another B2B payments platform Ybanq in July 2021.
Xpedize was founded in 2017 by former Citibank executives Regan Mithani and Deepak Gugnani and its investors included HDFC Capital and YourNest Venture Capital. The startup’s 25+ member team will continue to run the invoice discounting platform, Clear said in a statement.
Xpedize will be rebranded as Clear Invoice Discounting and will provide working capital and liquidity to suppliers. Clear will cater to suppliers of companies that it already has on its platform across various sectors including pharma, FMCG, auto, among others.
In an interaction with Moneycontrol after the announcement, Clear’s founder and CEO Archit Gupta said, “We serve 3,500 large enterprises that in turn have an ecosystem of 2 lakh vendors and 1 lakh dealer distributors. We want to create access to working capital for these SMEs and bring in cash flow based.”
There is a fundamental difference in the way lenders – old and new – assess the loan eligibility for SMEs. While banks and NBFCs look at balance sheets and profit and loss statements of prospective borrowers, fintechs take into account cashflows of businesses and their prospects.
Additionally, banks lend to SMEs in exchange for collaterals such as land or assets. Fintechs offer unsecured lending, where loans are advanced only on the basis of a borrower’s creditworthiness and not backed by collateral.
Most of these fintechs do not lend from their own books, but in partnership with banks. Clear too has partnered with banks and other financial institutions, including Receivables Exchange of India (RXIL) and Citi.
The company expects the acquisition to process Rs 1,000 crore in Gross Merchandise Value (GMV) by the end of the current financial year.
“We see a very strong opportunity as we expect invoice discounting to scale up in India substantially in the coming years. Over 20 crore invoices are processed annually on our platform so we believe that this a very large number of invoices can be discounted,” Gupta added.
With this new vertical, Clear will compete with the likes of Lendingkart, KredX, Rupeek, among others that offer credit to SMEs. The SME lending space is set to witness substantial growth as small businesses are gaining more traction than even the pre-pandemic era after two years of lull.
However, the space remains underserved despite SME lending being a priority sector for banks to lend as well.
According to Gupta, there is enough scope for multiple fintech lenders to grow in the market. “There's not much competition because all players are currently scaling up. There is immense scope and upside for everybody because this is a very large and underserved market,” he said.
The acquisition comes close to five months after Clear raised $75 million in a Series C round led by Kora Capital. Global fintech Stripe, Alua Capital, Think Investments and existing investors also participated in the round.The company also bagged investments from Aparna Chennapragada, Chief Product Officer at US-based financial services company Robinhood, Surojit Chatterjee, Chief Product Officer of US cryptocurrency exchange Coinbase and Balaji Srinivasan, ex-Chief Technology Officer of Coinbase before it announced solutions for customers to manage their cryptocurrency portfolio and taxes.