The fintech plans to utilise the fresh capital to launch new products, expand to new cities, augment lending partnerships and invest in technology
FinAGG Technologies, a Noida-based fintech offering cash-flow-based supply chain finance (SCF), has raised $3 million in a Pre-Series A funding round led by venture capital company BLinC Invest. Existing investor Prime Venture Partners also participated in this round. The company will utilise the fresh capital to launch new products, expand current products in new cities, augment lending partnerships and invest in technology.
Erstwhile co-founder of Priority Vendor Nipun Kohli and former co-founder of Entitle Tech Solutions R Srinivasan founded FinAGG in 2020 as a new-age supply chain platform. It focuses on providing closed-loop credit solutions to distributors, retailers and micro, small and medium enterprises (MSME) via its proprietary Quick Cash Flow platform.
Commenting on the fundraise, Kohli said, "We hope to take advantage of BlinC Invest's combined experience and partnership-led philosophy to create fintech products that will fill the many gaps in MSME financing today and cater to the companies that comprise the backbone of the Indian economy."
The fintech partners with large brands to onboard their distributors, suppliers, and retailers. It claims to have partnered with over 15 anchor brands and disbursed over Rs 1,200 crore to date.
There are around 6.3 crore MSMEs in India, which contribute roughly 30 per cent of the country's gross domestic product and employ over 100 million people. Despite contributing significantly to the GDP and the workforce, a majority do not have access to sufficient credit and liquidity required for daily working capital needs.
Ministry of Electronics and Information Technology's 2021-22 report estimated that the SCF gap in India is around INR 60,000 crore, with current SCF penetration being less than 1 per cent of GDP. Further, SCF contributes only 5 per cent of the entire banking system's outstanding assets. The large penetration gap and the rise in global supply chain volumes over the last few years indicate a significant market opportunity for SCF as a product offering.
Regarding the industry outlook, global SCF volumes have increased significantly over the last few years, reaching $1.8 trillion in 2021 and are expected to grow at around 17 per cent CAGR. Further, the Asia SCF market has grown at a CAGR of 29 per cent. BLinC Invest expects India to follow a similar trend with respect to adopting supply chain financing products.
BLinC Invest is a Rs 100 crore fund based out of Mumbai investing in fintech and edtech founded by Amit Ratanpal. It aims to make around six investments across fintech and edtech with an average ticket size of Rs 10 crore to 20 crores.
"FinAGG's strong growth since inception is a testament to its unique solution, which addresses a massive opportunity, providing MSMEs with credit for short periods. This helps increase sales and decreases stockouts, ensuring no demand goes unserved. We are privileged to be associated with this team from the start of their journey and welcome the team at BLinC to transform MSME financing in India," said Sanjay Swamy, Managing Partner at Priven Advisors LLP (Prime Venture Partners).