Dealflow | June 18, 2018

CapitalG backs Indian small business lender Aye Finance

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

Gurgaon, India-based Aye Finance launched in 2014 to help India’s small business owners access working capital and credit to grow their businesses. The company has been using a proprietary analytics platform to conduct “alternative risk assessment” and manages a loan book of 4.7 billion rupees ($70 million).

CapitalG, Alphabet’s venture arm, invested in the Indian small business lender’s $21.5 million Series C round. The fund invests in growth-stage tech companies in the U.S., China and India that “drive market disruption by harnessing long-term technology trends.” Its other investments in India include healthcare management software firm Practo and education venture Cuemath, both of which primarily serve and/or benefit India’s higher-income demographic segments.  

  • Impact as disruption… In Aye’s case, CapitalG’s “market disruption” investment thesis could also yield significant social impact. “[Small businesses] form the backbone of the Indian economy and contribute a large portion of its GDP. However, they lack access to formal credit,” said CapitalG’s India lead Kaushik Anand. “Over the last few years, Aye has proven that their model is one of the most efficient ways to deliver credit to underserved MSMEs across industry clusters.”
  • Catalytic impact investors…  Aye Finance raised a $10 million Series B round in 2016 led by impact fund LGT Impact Ventures with backing from Accion. Asia-focused venture fund SAIF Partners also invested.
  • Coming back for more… SAIF Partners and LGT Impact also joined Aye’s Series C round.

Earlier this year, Aye Finance raised $3.8 million in debt capital to grow its loan portfolio.