MICROCAPITAL BRIEF: Accion Venture Lab, YourNest Invest $1.3m for Equity Stakes in Digital Lender CredRight of India

CredRight, an online lender to individuals as well as micro-, small and medium-sized enterprises (MSMEs) in India, recently received equity investments totaling INR 90 million (USD 1.3 million) from Accion Venture Labs, a fund of US-based NGO Accion, and YourNest, a venture capital firm based in India. CredRight will use the proceeds to continue the development of its data collection technology, grow its team and acquire “more unserved & underserved customers.” The size of each party’s purchase and CredRight’s ownership structure remain undisclosed.

Formed in 2016 and based in the city of Hyderabad, CredRight specializes in loans to MSMEs and individuals that it underwrites by analyzing data from its partner chit funds. Chit funds collect money from members to on-lend to others; meanwhile, members receive payouts via a raffling mechanism. Although customer and financial information on CredRight is unavailable, the company’s founder and CEO, Neeraj Bansal, said in May 2018 that the firm plans to spend INR 1 billion (USD 15 million) over the next 12 to 15 months in pursuit of additional customers. As of 2018, the chit funds registered with the Reserve Bank of India (RBI) serve 5 million customers, of which half are registered as MSMEs.

YourNest is an early-stage venture capital investor that was established in 2012 in the city of Gurgaon. The firm has a portfolio of 19 companies in the financial service, technology, telecommunications and e-commerce sectors. A typical YourNest investment ranges between INR 30 million (USD 570,000) and INR 50 million (USD 950,000) in exchange for a 25- to 35-percent equity stake.

Accion Venture Lab, which was created in 2011, invests “in technology and business model innovation as well as new approaches that help underserved people and small businesses benefit from the world’s formal economy.” The majority of Accion Venture Lab’s investees are seed-stage firms in the microfinance and fintech sectors. Its typical investment is an equity placement of USD 300,000 to USD 500,000. As of May 2018, its portfolio consists of 32 enterprises, five of which are based in India.
The mission of Accion is to alleviate poverty by offering services such as microenterprise loans and business training. Accion was founded in 1961 and issued its first microloan in 1973 in Brazil. Accion’s partner microfinance institutions (MFIs) provide loans entrepreneurs through 64 MFIs in 32 countries in Africa, the Americas and Asia. During 2016, the network disbursed USD 10.9 billion in loans, and it held USD 4.2 billion in savings deposits as of December of that year.
By Nicholas Galimberti, Research Associate

Sources and Additional Resources

Accion press release
http://accion.org/content/credright-raises-rs9-crore-pre-series-funding-yournest-accion

CredRight background
https://www.credright.com/site/about/

YourNest background
http://www.yournest.in/you/

Bloomberg Company Profile: YourNest
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=145235408

All India Association of Chit Funds (AIACF) article: How Chit Funds Work
https://aiacf.com/how-chit-funds-work/

MicroCapital article; June 5, 2018; Toffee Insurance of India Secures $1.5m in Equity for Digital Microinsurance from Kalaari Capital, Omidyar Network, Accion Venture Lab
https://www.microcapital.org/microcapital-brief-toffee-insurance-of-india-secures-1-5m-in-equity-for-digital-microinsurance-from-kalaari-capital-omidyar-network-accion-venture-lab/

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