Indian fintech Lentra raises $ 60 million to expand lending as a service to banks • TechCrunch

India initially made a name for itself in the tech world years ago when it established itself as a key hub for business process outsourcing. Now that legacy has taken a very different turn in fintech with outsourcing of a very different kind, with the emergence of embedded financial technology. In the latest development, Lentra, an AI-powered Indian financial startup, raised $ 60 million, a Series B that values ​​the startup at “over $ 400 million,” D Venkatesh, founder and CEO of the startup, told TechCrunch. . interview.

Existing investors Bessemer Venture Partners and Susquehanna International Group (SIG) led the round with the strategic participation of Citi Ventures, a subsidiary of New York-based investment banking giant Citigroup.

This is Citi Ventures’ first investment in a fintech outside of India, and this round overall highlights how far the fintech ecosystem and embedded finance have come in recent years. Lentra, which is profitable, has grown at a very fast pace. In 2019, its first year of operation, it recorded $ 1 million from its “annual consumption rate”: this term refers to the amount of revenue that Leentra makes based on the use of its APIs. Starting this year, that figure will reach $ 10 million and is expected to reach $ 100 million in 2024.

The Mumbai-based startup works with commercial banks to enhance its digital lending services. HDFC Bank, Federal Bank, Standard Chartered and IDFC First Bank are some of its main clients. Overall, Lentra has more than 50 customers and has processed over 13 billion transactions and loans worth $ 21 billion since its launch. Venkatesh said the startup achieved all this growth without hiring a single sales manager until April of this year.

The company’s mission is not unlike that of a number of other fintechs that have jumped into the ring to work with, rather than upset and completely disrupt, legacy financial service providers, who have found themselves unable to keep up. with innovation from faster-moving, technology-based competitors.

“We want to help and empower banks, who are our customers, to lend better, lend fully on a digital platform and improve all parameters,” said Venkatesh.

These parameters are the same for banks around the world. Yes, banks want to lend more and be more accessible to more potential borrowers, thus moving to digital platforms to help them scale and compete better with digital-first offerings. But banks have already burned their feet many times: they don’t want to take on a load of bad loans in the downsizing process, so they need better technology to improve how they control borrowers and also to have a better grip on forecasting. of what they could expect to achieve as a result (and losses).

Four-year fintech helps them do this through a variety of lending tools. Lentra Lending Cloud, which provides ready-to-use third-party API connectors to various data sources, as well as a code-free Loan Management System (LMS) and Business Rules Engine (BREx) with modules that customers can use from the box. The startup also has a platform called GoNoGo in its catalog that helps banks ascertain whether a loan should be granted to a customer once the application is received.

Venkatesh said that in India, 90% of loan fraud occurs through identity document theft, in which bad guys impersonate someone with a better credit record to get a loan quickly. Lentra uses AI to triangulate data to identify potential fraud attempts.

“If you solve identity theft fraud, you minimize the approach or position the bank will have towards a bad asset or bad loan,” said the founder.

He said that while banks were able to reduce the lending process – application, processing and approval or denial of applications – to between six and seven days, Lentra’s technology reduced that turnaround to seconds. .

While a number of startups are looking to facilitate lending to banks, it is interesting to note that Lentra sees Salesforce as one of its biggest competitors when it comes to lending.

“Our number one goal is anyone who uses Salesforce to create loans. Come on, we cling to them and then we convert them, ”Venkatesh said.

Citi is not only interested in leveraging more of India’s tech ecosystem, but also in leveraging it for its own global growth.

“Lentra is our first fintech investment in India and we are very excited about the team’s ability to develop and scale low-friction software solutions for lenders,” Everett Leonidas, APAC Director and Lead Investor for Citi Ventures, said in a statement. “As a global bank, we look forward to Lentra expanding its products and platform internationally.”

Venkatesh told TechCrunch that Lentra plans to use the funds to continue updating its platform, adding new features, and making it more robust and faster. The startup will also expand beyond India and establish its business outside the country, starting with three Asian economies: Indonesia, Philippines and Vietnam. After the initial expansion, the startup plans to go beyond Asia and enter the United States

Offices in the three new Asian countries will become operational in January, the founder said.

Lentra has already been present in Singapore since it acquired an AI startup TheDataTeam in June this year that had an office in Lion City. Venkatesh said the Singapore office would become the vehicle for the startup to enter ASEAN economies.

In addition to improving the offer and expanding the business, Lentra plans to acquire complementary businesses. The founder told TechCrunch that his acquisition plans focus on three areas: robotic process automation, payment systems or solutions that are not regulated entities, and teams that work on statistical modeling or heuristic modeling within statistics.

“Lentra is enabling lenders to fuel the dreams of millions with effective financial inclusion and credit decisions,” said Vishal Gupta, partner of Bessemer Venture Partners. “We were really impressed with the combination of their technological prowess and the commercial advantage that Lentra offers its customers. We look forward to helping them continue to realize their vision of becoming the most trusted and sought after cloud-native digital lending platform, enabling clients to democratize credit through accurate decisions and fast processing. ”

Lentra also has HDFC Bank as an investor, although it did not participate in the latest funding round. Venkatesh said the bank could have invested, but this time it didn’t as it had to follow the Reserve Bank of India’s condition of not holding more than 10% in unrelated assets due to the merger with the HDFC group.

“We are thrilled to support Lentra, which was SIG’s first Indian VC investment in 2019. Since SIG’s investment, Lentra has demonstrated superior revenue retention metrics and has grown 20x while demonstrating strong capital efficiency. . SIG is excited about Lentra’s next phase of growth as it moves to serve global clients, ”said Bhavanipratap Rana, SIG’s investment advisor.

The startup currently has Mumbai as its number one market, followed by Delhi, Chennai and Bengaluru. It has a team of 500 that aims to grow to 800 to support ongoing plans.

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