Jaipur-based Finova Capital is a non-banking financial institution that offers personal and home loans to India’s urban and rural poor. The firm also provides working capital, machinery and business loans to semi-skilled workers and small businesses, who can’t easily get financing from traditional lenders.
Instead of conventional credit histories, Finova analyzes an enterprise’s cash flow and overall financial performance. The lender has over 400 branches across 16 Indian states and offers business loans ranging from 200,000 Rupees to 2.5 million Rupees (around $2,300 to $30,000).
Partial exit
Finova raised $135 million in a Series E round from Avataar Venture Partners, Sofina and Madison India Capital. Existing investor Norwest Venture Partners, which led Finova’s $65 million Series D in 2022 also participated in the latest funding round. The deal is said to have achieved a partial exit for undisclosed early investors and brings Finova’s total funding to just over $274 million, according to Crunchbase.
Finova’s team has built “a technology-driven platform that is highly profitable and has grown sevenfold in the last four years,” said Avatar’s Anirudh Singh. The new funding will be used for geographical expansion, strengthening Finova’s tech stack and growing its loan book.
Borrower protection
Finova’s raise comes in the wake of a ban earlier this month by India’s central bank on four non-banking finance institutions, including two microfinance institutions, for usury. The four were Asirvad Microfinance, Arohan Financial Services, DMI Finance and Navi Finserv, founded by Flipkart’s Sachin Bansal.
India’s Microfinance Industry Network subsequently announced plans to review its members and cap borrower microfinance debt to 200,000 Rupees ($2,300) while limiting each borrower to four lenders.