BackOptaCredit in talks to raise up to $10 million from new investors
Fintech start-up OptaCredit is in early-stage discussions with impact funds and Asian investors, says co-founder Kumar Srivatsan
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New Delhi: OptaCredit Fintech Pvt. Ltd, a lender to salaried borrowers, is in talks to raise $8-10 million in a Series A funding round from new venture capital investors, a top company executive said on Monday. The Chennai-based start-up is in early discussions with impact funds and Asian investors, said S. Kumar Srivatsan, co-founder and chief executive officer of OptaCredit.
OptaCredit raised an undisclosed amount in a pre-series A round earlier this year from the family office of the founders of a payment technology company.
It also secured a $30 million credit line from DMI Finance, besides another $4 million in credit from the same firm in January this year. DMI is an India-focused financial services platform with businesses in corporate lending, housing finance, consumer finance and asset management.
Founded in 2016 by Srivatsan and Sriram Chandramouli, OptaCredit uses proprietary scoring techniques along with artificial intelligence to extend medium-term loans to uncategorized or unlisted employees.
Chennai-based investment bank Advay Capital Advisors is advising the company on the investment round.
The firm plans to use the capital to expand to tier-II and III cities. It will also build its technology and refine its products to offer credit to underserved employees.
“We have a niche: laser sharp focus on a segment where no one else operates—uncategorized employees. The data we are generating is a complete white space and we are running algorithms on it. It’s straining quickly and our machine learning capabilities are going to redefine how we look into the segment," said Srivatsan.
OptaCredit claims to operate as a data-driven end-to-end lending stack powered by artificial intelligence. The start up, which also has a lending license, takes a hybrid approach by contributing a certain percentage of loan assets generated via its platform on its balance sheet.
Traditional lenders reach out to 70-80 percent of employers, however staff working in mom and pop stores and non-branded/marketed companies are denied loans or given sub-optimal credit, according to Srivatsan. While companies like EarlySalary, LoanTap offer credit to working professionals for various purposes, the credit offerings for uncategorized employees remains a ‘white space’.
OptaCredit focuses on using alternative mechanisms (gathering non-traditional and traditional data) to determine credit worthiness of ‘Thin File’ applicants. The applicant is then assigned an OptaScore (OptaCredit’s proprietary score) and using machine learning algorithms on the various datasets, the company analyses repayment patterns allowing it to make credit decisions.
Srivatsan said that the company is aiming at a loan book of ₹ 500-550 crore in the next 18-24 months. He declined to comment on the number and amount of loans disbursed till date.
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