Exclusive: Insight Partners in talks to back CredAvenue at $1.3 billion valuation with unicorn tag

CredAvenue, an online platform to raise corporate debt is in talks to raise a $150 million Series B round valuing it at over a billion dollars, an aggressive valuation amid a broader selloff in technology stocks, people aware of the matter said, requesting anonymity.

Insight Partners- one of the world’s biggest newly-active tech investors - and Tiger Global Management are in talks to lead the round, less than six months after it was valued at about $400 million in its first funding round in September last year. Existing investors Sequoia and Lightspeed India will invest too.

CredAvenue, spun off from lender Vivriti Capital and run by Gaurav Kumar connects banks and non-bank lenders to co-lend, gives asset-backed loans, provides debt via bonds or supply chain finance. It has facilitated transactions worth Rs 85,000 crore and has over 500 lenders on its platform. CredAvenue provides an API (Application Program Interface) plug-in to its borrowers, making it a software platform of sorts, in addition to providing underwriting services to lenders on its platforms.

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The startup is currently doing an annualised revenue of $25-30 million, or about $2.5 million (Rs 15 crore) of revenue a month, said people close to the deal. That would put the current round’s valuation at about 40 times revenue, on the higher range of software valuations when other listed software and fintech companies have seen their stock prices collapse in 2022.

CredAvenue’s Kumar denied the development while Tiger declined to comment and Insight did not respond to a query seeking comment.

A completed deal would make the company a unicorn- private tech companies valued at over a billion dollars- after India has already produced seven unicorns seven weeks into the year.

Recently, Chennai-based CredAvenue also acquired a 75 percent stake in Mumbai-based Spocto Solutions, an artificial intelligence and machine learning-powered debt recovery platform to extend an additional feature to its client banks and institutions besides providing a marketplace for about $50 million.

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With this acquisition, the banks and NBFCs will also be able to execute debt collection on the same platform.

Investors are betting that CredAvenue can fill the gap of accessing corporate debt easily, that too when debt is harder to raise in India than other countries. In 2020, India’s credit-to-Gross Domestic Product (GDP) ratio stood at around 56 percent. But, according to the data from the Bank of International Settlements (BIS), that number is half of the G20 average. With the ratio being much lower than its peers, India has a long way to go in increasing access to credit.

“Debt capital markets have largely been concentrated. Three percent of the rated universe has access to almost 90 percent of the total debt market. So, unless infrastructure like this is built, the market will not have the confidence to access lower-rated bonds, below AAA and AA,” Kumar told Moneycontrol earlier.