George Soros-backed Aspada Investment Company in India has made a commitment of Rs 12 crore in Bangalore-based Capital Float, a business that provides working capital loans to the under-served small businesses in India via a technology-led origination and credit underwriting platform.
The company works with SMEs across a variety of sectors, including manufacturing, services and e-commerce, and is led by Gaurav Hinduja and Sashank Rishyasringa, who had both returned to India to start Capital Float after completing their MBAs at Stanford University. Gaurav Hinduja is part of the family which built Gokaldas Exports before selling off to global private equity major Blackstone.
"Small businesses are the key to India's sustained growth, and yet most lack access to mainstream bank finance and cannot easily access working capital and short-term debt. As a result, many are forced to resort to borrowing from friends and family, supplier credit or high interest loans from informal sources to meet their day-to-day funding needs of the business," said Gaurav Hinduja.
"The majority of SMEs today operate with cash cycles of 60 days or longer, with few institutional options for working capital finance. By investing in technology, we have lowered the costs of customer acquisition and credit decision making, and have developed a methodology for the timely and transparent financing that can benefit a vastly underserved and unorganised segment," explained Sashank Rishyasringa.
"Capital Float possesses a good founding team that has built a platform that is unique within the Indian small business lending segment. There are numerous global proxies of enormous scale in this model, and we believe that the Capital Float team can build an organisation that can alter the market for SME finance in India and beyond," said Kartik Srivatsa, of Aspada Investment Advisors.
The Aspada Investment Company is backed by a significant commitment from the Soros Economic Development Fund. Aspada has so far invested in a fruits and vegetables aggregator, a supply chain solutions provider, another SME financing company and a cold chain logistics provider.
Aspada also oversees the portfolio of the SONG fund, an early stage venture capital firm funded by the Soros Economic Development Fund, Omidyar Network and Google.
