How Grip Invest is making lease finance an attractive investment option

The platform aims to give retail investors an option other than FDs and stocks, and also wants make lease finance a popular choice for firms seeking asset-light business models

It is said that the best time to start a business is during a downturn. Though the pandemic was much more than just a downturn that pulled down world growth rates and wiped out many small businesses, it also saw many new ventures start their innings.

One such is the Gurugram-based Grip Invest. Founded by Nikhil Aggarwal, Vivek Gulati and Aashish Jindal, the platform tries to solve two problems. First, it aims to give retail investors an  option other than fixed deposits and stocks. Second, it wants to make lease finance a popular choice for companies wanting to have asset-light business models.

However, for Aggarwal, the idea of lease financing struck due to his experience in the mobility space, particularly public transport. Aggarwal was the founding member of Chalo, a mobility tech startup focused on the public transport system, and was the COO of the company till he exited in 2019. Post that, he went on to work with the World Bank as a public policy consultant for public transportation.

“While working with the World Bank, I saw the opportunity of what leasing could do to businesses in the mobility space. In India this is at a very nascent stage. Being a founder, I also connected with companies who were looking at asset-light business models. Also as an investor there were only two investment options for me--fixed deposit or stock market--there was no third option,” said Aggarwal.

Grip Invest was started to solve these issues. The business is an asset-light model, and serves as a platform or investment marketplace that offers investors options to co-invest and have partial ownership in physical assets that earn lease income. Aggarwal says an investor can start as low as Rs 20,000. Grip Invest has two broad products--lease financing and inventory finance. It intends to add more products and features.

The company started its operations in the peak of the pandemic in June 2020. “We were actually planning to start in March but the pandemic delayed it. Frankly the thought of not wanting to launch never occurred to us. We knew there was a huge opportunity for this. What we did not anticipate, however, was how coming out of the pandemic, the tailwinds of the business would be incredible,” added Aggarwal.

In terms of milestones, the company has facilitated Rs 110 crore of finance across 50 companies. It has a registered user base of 100,000. The repeat rate of investors wanting to invest is 45 per cent and about 12 per cent of the investors would be making their fifth investment using this platform.  Aggarwal shares that the IRR for investors is almost 20 per cent (pre-tax basis) and 12-14 per cent (post tax) depending on the asset.

Aggarwal says that with businesses coming out of the pandemic, the need for lease financing has skyrocketed, and that that the higher amounts middle-class people saved is prompting them to look at other investment avenues. “We got incredibly lucky with the timing. We hit our Rs 100 crore investment by September-end. We had envisaged that we would reach this milestone towards November-end. We outperformed our milestone by two months. We are now anticipating that we will hit Rs 1,000 crore by next September,” shared Aggarwal.

Grip’s model is simple. There are companies looking at taking non-real estate assets on lease. For instance, mobility firms require a large number of vehicles. Now they can either buy these upright or take loans, or take the same asset on lease. Aggarwal believes that lease is the most competitive form of acquiring these assets. Investors, on the other hand, are being offered an option to purchase and lease assets for companies and create a stream of monthly fixed income. At present, the company has three major focus sectors for leasing—mobility, warehousing and electronics. It is also looking at cloud kitchen and healthcare as new emerging areas.

Grip on Tuesday entered into a $5 million asset financing deal with House of Kieraya (HoK), well-known for furniture and lifestyle rental brand, Furlenco.

“Over the years, we have proven that alternate debt platforms can work seamlessly with growing companies like ours. We plan to expand to 25 cities soon, and HoK is targeting a revenue of Rs 2,500 crore by 2026,” says Vaibhav Laddha, Head of Corporate Finance at HoK.

Some companies that have used Grip Invest’s platform to access different channels of growth capital include Udaan, Furlenco, Holisol, Everest Fleet, Loadshare, IPL Tech, ChargeZone, Vogo, FleetX, FabAlley, and BlueTokai.

This August, the company raised $3 million in a Series A round led by Venture Highway and Endiya Partners. The funding round also had participation from earlier investors Anicut Angel Funding, Gemba Capital and other angels.

"Mass-affluent retail investors in India are greatly underserved--other alternatives like P2P or revenue-based financing typically do not have the risk-adjusted returns that asset-backed products on Grip provide. There is a strong need for a platform like Grip," said Samir Sood, Founder, Venture Highway.