Sequoia, Lightspeed pump in $90 million into digital debt platform CredAvenue

Gaurav Kumar, founder & CEO, CredAvenue 

Digital debt platform CredAvenue on Tuesday said Sequoia Capital India and Lightspeed, TVS Capital Funds and Lightrock have pumped in $90 million into their company. This is the largest Series A funding through equity for an Indian company this year, independent data showed.

CredAvenue, which connects companies with lenders through its tech platform, has cumulatively facilitated transactions worth around $9 billion, for around 1,600 institutional borrowers and over 750 investors.

In 2021, the gross transaction value totalled around $2 billion, with an aim to end FY22 at $5.5 billion value. CredAvenue’s revenues were at Rs 47 crore in FY21 and are estimated to more than triple to Rs 160 crore by the end of March 2022, a source said.

“The funds raised will be largely used towards developing the technology platform, the data platform and building a network of clients and investors,” says Gaurav Kumar, the founder and CEO of CredAvenue.

CredAvenue’s clients are spread across 29 sectors and include the largest corporates—from firms such as Shriram Transport to new age tech company Infra.Market. The company has a five-product mix, which simplifies access to credit for borrowers from BB to AA rating, besides offering a range of products from loans to working capital, bonds, co-lending (along with banks), supply chain finance and securitisation.

"Gaurav and his team are veterans in the industry. 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 the GDP, well behind the global average of around 150 percent,” said Sakshi Chopra, managing director of Sequoia India, in a press statement.

Aditya Sharma, partner (growth equity), Lightspeed, said: “With its deep focus on technology, product innovation and process automation, CredAvenue has created a thriving marketplace for credit discovery and technology-led monitoring and fulfillment.”

Credit growth has been slowing in recent decades due to the weak financial health of banks hurt by bad loans, which got them more cautious to lend. The scenario remained sluggish during the Covid-19 pandemic. On a year-on-year (y-o-y) basis, non-food bank credit growth stood at 6.2 percent in July 2021, compared to 6.4 percent in July 2020, according to RBI data. Credit growth to industry remained subdued but it improved for mid-sized and micro-businesses.

Kumar said securitised debt was impacted during the pandemic but is confident that segments of the economy are starting to pick up pace. “Overall demand for credit will come back in sectors such as housing, gold and two-wheeler market,” Kumar says.

He added that the fresh raising of equity has meant a dilution of 20 percent stake in the promoters’ holding. “We are good for the next 24 months,” Kumar added.