Debt platform CredAvenue that provides a platform for debt-seeking enterprises to connect with lenders and investors, has raised $90 million in its Series A round of funding. The round which was led by Sequoia Capital India has brought the valuation of the company to $410 million.
Other investors who participated in the round are Lightspeed, TVS Capital Funds, Lightrock, CRED, and Stride Ventures. Avendus Capital served as the financial advisor to CredAvenue on the transaction.
In an interview with Moneycontrol, CredAvenue Founder and CEO Gaurav Kumar said that the company will use the funds to build the current platform.
“Investing in our data platform is going to be a core focus for us over the next 24 months. So, a large chunk of this will be used to build our current capabilities. We will also invest in accelerating our customer onboarding journey,” Kumar said.
“We will be looking at how we can get to a fairly large number of enterprises who are deserving of the debt and the platform,” he added.
The Chennai-based startup provides the infrastructure to discover and execute debt transactions and has five platforms for individuals and enterprises. The platforms include a loan platform for enterprises, bond issuance and investment platform, trade financing solutions, end-to-end securitisation and portfolio buyouts, and a co-lending platform for banks and NBFCs.
Founded in 2020, the company said it has facilitated transactions worth $9 billion, and over 1,500 institutional borrowers and over 750 lenders have used its platform.
Kumar said the company is aiming to grow its revenue by over three times in the next two years.
“We closed FY21 with a revenue of Rs 47 crore. For FY22 we have already garnered revenues worth Rs 170 crore. In the next 24 months, we would like to grow our revenue to around Rs 450 to Rs 500 crore,” he said.
He added that the focus of the strategy is to keep investing and adding customers. “We want to focus on investing as these are our formative years. Profitability will follow once we are at a stage when the investment requirements reduce,” he explained.
The business earns from both enterprises and lenders who pay for using the company’s platform to connect and execute transactions. “Ours is a very high margins business. Our gross margins are currently upwards of 70 percent,” Kumar added.
Kumar sees the low debt penetration in India as an opportunity for the platform’s growth. “India’s debt-to-GDP ratio is lower than other countries, there is much scope for deepening of the market. We see only internal challenges since we are building something from scratch. Adoption and aligning the ecosystem are the challenges we are working towards,” Kumar explained.
Speaking on the investment, Sequoia India Managing Director Sakshi Chopra said, “Gaurav and team are veterans in the industry and we are delighted to partner with them in their vision to deepen the debt markets in India which currently remain underdeveloped at around 65 percent of GDP, well behind the global average of 150 percent. CredAvenue simplifies access to credit for borrowers ranging from a BB to AA rating but also improves access to multiple debt products like bonds, supply chain financing, etc. on a single unified platform."
The company is also looking to grow its team from 350 employees currently to over 700 by the end of FY22 and is working on setting up its offices in Bengaluru.
Gopal Srinivasan, Chairman at TVS Capital Funds believes that the startup will facilitate larger participation of retail investors in the corporate debt market.
“Proactive regulatory reforms are having a game-changing impact on the debt market structure in India. CredAvenue’s platform can provide institutional investors access to larger liquidity pools at market-efficient rates and faster transaction times,” Srinivasan said.
Founded in 2020, the company had raised around $8 to $10 million in its seed funding round led by Lightrock India. Before starting up CredAvenue, Kumar was the CEO of Chennai-based Northern Arc Investment Adviser Services.