Millions of Indians were hit hard by the coronavirus lockdown in 2020. Jobs were lost as businesses shut down over fears of the fast-spreading disease, and people struggled to pay their debts.
To provide relief to borrowers, the Reserve Bank of India (RBI) announced a moratorium on repayments of loans from April to June. For lenders who would have to deal with defaults, the situation was precarious.
Small lenders would be impacted even more deeply. Among them was Propelld, a fintech startup focusing on education. It was founded by three friends from IIT Madras with the objective of profitably funding the education of those who could not afford it.
A Twitter thread from a Ritesh Banglani, who was a member of the board of Propelld, detailed how the enterprise navigated the situation.
“The company had exposure to some of the most vulnerable borrowers during the pandemic --- children of shopkeepers, auto drivers and schoolteachers,” he said. “There's no way they would be able to continue servicing their education loans.”
Banglani reached out to other investors for advice. They suggested that Propelld stop giving out new loans.
"Don't throw good money after bad. Everybody in the team should be knocking on doors to collect EMIs. Don't think of growth; live to fight another day,” he was told.
Banglani said he passed on that advice to Propelld’s founders Bibhu Prasad Das, Brijesh Samantaray and Victor Senapaty but they outright refused to stop lending.
“Anyone can lend in fair weather,” Das told Banglani. “You backed us for our underwriting, so you got to trust us when the waters are choppy."
Samantaray wanted to grab market share because banks were spooked, Banglani said.
Banglani said the founders’ optimism was incredible. “The sky was falling and these boys saw that as an *opportunity*? They were *excited* at the prospect of a bloodbath in the industry?”
Propelld then decided to look at defaults on a weekly basis. “Any sign of stress, and we would pull back,” Banglani said. “But otherwise, Propelld would gun for growth. In the middle of a global economic meltdown.”
The results were positive. “Their monthly lending grew 80x,” Banglani said; They attacked new and difficult markets like supplementary education and exam coaching. They launched a new payment product for coaching centers. Through three waves of the pandemic, they never let up.”
All this while, the credit of Propelld remained strong, Banglani added.
“Bajaj declared a 35% first-default; Propelld had 3%. Even that, they chased down relentlessly to less than 1% within 90 days. The mood in our weekly calls went from fearful to cheerful. In July, we gave them more money to chase growth.”
Now, Propelld has raised $35 million in Series-B funding.
“This is a story of not only grit and tenacity, but of unbridled optimism,” Banglani said.” Of three minds that were truly without fear. It's a long journey of course, and they're just getting started.”
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