Finova Capital raises $15 mn from Faering Capital and Sequoia India

Jaipur based Finova Capital (Finova), a Non-Banking Financial Company, has raised $15 million from Faering Capital and existing investor Sequoia India. Finova will use the funds to expand its presence and enable access to credit for the unbanked population. 

Finova Capital aims to serve the ‘“missing middle”’ of the MSME segment, small businesses and service providers in small towns and rural areas, who are looking for mid-ticket loans of INR 5-6 lakhs for a period of up to seven years. The loans are provided at customized terms and designed keeping the end customer in mind.

Finova, which was founded in 2016 by Mohit & Sunita Sahney, has disbursed loans of Rs. 250+ crores to over 4,500+ customers till date. Currently operating out of 52 branches across Rajasthan, the company plans to expand to over 75 branches across Rajasthan, Delhi and Madhya Pradesh by the end of Dec 2019.

Finova analyzes borrower’s cash flows as opposed to formal documentation for credit assessment, since the segment that it addresses rarely has formal documentation. The company has created custom templates that assist in credit underwriting across various sectors. Finova also helps the financially excluded segments attain financial literacy, thus making them eligible for digital disbursement and repayment of loans.

Talking about the fund raise, Mohit Sahney, founder and CEO of Finova said, “We are very excited to welcome Faering Capital to be a part of our journey given their significant track record of investments in the financial services space.”  We are at an important juncture as we continue to find innovative ways to provide the unbanked population access to business loans – doing so as one of the few players in the running a profitable operation from inception.”

“Faering Capital is delighted to partner with Finova which has established itself as a profitable and fast growing SME lender that uniquely addresses the funding needs of small businesses. Our investment in Finova is consistent with our investment approach of backing strong management teams that are building market leading companies in their area of focus.” said Aditya Parekh, Co-founder and Managing Director, Faering Capital

“We are impressed with the company’s execution over the last two years and we believe Mohit and team are on to building a large business with strong credit performance”, said Ishaan Mittal, Principal, Sequoia India Capital Advisors. “Since inception, Finova has focused on deepening presence across Rajasthan while also building a strong team that can scale the business in the coming years. Sequoia India is happy to have participated significantly in this round to help the company expand to new states and make financial inclusion a reality for small businesses across the country.” 

Bangalore based Unitus Capital acted as exclusive financial transaction advisor to Finova, while Vertices Partners, Trilegal and Themis Associates acted as legal advisors to the transaction.