The valuation was becoming tricky, given the stage of business, and the nature of business requiring multiple rounds in future
Somewhere in the middle of 2014, one acquaintance in the angel investing space arranged a meeting with Harshvardhan Lunia to evaluate LendingKart, considering that it was a fintech deal and I had two decade-plus experience in the financial services industry. Back then, many startups were attempting to address multiple legacy issues associated with credit—access, speed of access, risk evaluation, underwriting, delivery, recovery, etc.
I found Lunia’s prior work in the banking industry to be impressive, as well as the concept of digital lending platform to address speedy access to short-term credit and evaluation based on contemporary matrices equipped with data analytics, as against historic credit evaluation tools. He had just started and, if I recollect right, seemingly were looking to raise additional seed capital to strengthen the technology platform, aggressively build the team and, most importantly, meet the statutory capitalisation requirements for a lending outfit.
The discussion then veered around the quantum of raise, valuation and financial instrument for the round, among other business issues, risk management and scalability. The valuation was becoming tricky, given the stage of business, and the nature of business requiring multiple rounds in future. The key deliberation then was to explore pricing the round at a discount to the next institutional round. Now, personally, I am rarely enthused with the concept of pricing linked to future rounds, especially in startups or early-stage investments and it led me to stepping back.
With a strong founding team going on to build a scalable platform and, subsequently, onboarding exceptional institutional investors, such as Fullerton, Bertelsmann, Mayfield, Sistema, Saama Capital, India Quotient, to raise close to ₹10 billion, LendingKart has done pioneering work in the digital lending space, besides access and delivery of credit. Since its inception, it has evaluated nearly half a million applications, disbursing 60,000-plus loans to 55,000-plus MSMEs in 1300-plus cities across all 29 states and union territories in India.
