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American Express’ investment arm has led a US$4 million series A funding in fintech startup IndiaLends, it announced today.
It’s American Express Ventures’ first investment in a fintech startup – and only its second overall in 2016. It invested in Tapzo, formerly known as Helpchat, in September.
The sector is a US$45 billion opportunity by 2020.
IndiaLends caters to both consumers and financial institutions. People can connect with leading banks in India such as HDFC and ICICI, as well as non-banking financial companies – like Bajaj Finserve and Capital First – to avail loans faster at a lower cost.
On the enterprise side, IndiaLends provides credit risk scoring and other analytics products based on parameters such as consumer preferences, and browsing patterns.
“This new round of funding not only gives us the capital to scale but also provides us access to resources and learnings from developed fintech markets such as the US and China,” said Gaurav Chopra, co-founder of IndiaLends.
Fintech boom
American Express Ventures, set up in 2011, made its first investment in India in 2014 when it backed Bangalore-based cloud software provider Capillary.
“IndiaLends’ platform is helping to connect lenders and borrowers in India more efficiently by providing a user-friendly experience for consumers and leveraging a broader set of data than has traditionally been available to financial institutions in the market,” said Rohit Bodas, partner at American Express Ventures. Citibank, Barclays, and Goldman Sachs are among the financial institutions that have launched fintech-focused accelerator programmes.
More than 12,000 finance-focused startups have emerged in recent years, prompting global investment of US$19 billion in 2015 in the fintech space. The global fintech software and services sector is expected to boom to US$45 billion opportunity by 2020, according to NASSCOM.
In India the segment is still at a nascent stage – but it’s growing rapidly. There are over 400 fintech firms operating in the nation, boosted in large part by foreign investments in fintech accelerators and incubators. NASSCOM predicts that India’s fintech software market alone could touch US$2.4 billion by 2020, doubling the current rate of growth.
IndiaLends plans to use the proceeds to expand its team in data sciences and analytics. It will also expand geographically into smaller cities over the next few weeks, the company said.
The startup’s existing investors – venture capital firm DSG Consumer Partners, Chinese investment firm Cyber Carrier, and AdvantEdge Partners – also participated in the funding. IndiaLends, which claims to help its customers access cheaper credit, counts Siddharth Parekh among its early-stage investors. Parekh is a senior partner at private equity firm Paragon Partners and the son of HDFC chairman Deepak Parekh.
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