Kinara Capital raises $14.5 mn in Series C funding

It is an NBFC that lends to micro, small and medium enterprises without collateral

Kinara Capital, which lends to micro, small and medium enterprises (MSMEs) without collateral, has raised $14.5 million in Series C funding from multiple investors including existing ones, Michael & Susan Dell Foundation and Patamar Capital, and new investors Gaja Capital and Gawa Capital.

This round has also provided exits to Shriram City Union Finance Ltd and investors of IIX's Impact Partners platform. The fresh round of funding will be deployed to expand the product portfolio in existing and new geographies in India and increase investment in technology to improve efficiency in field operations.

Founded and led by CEO, Hardika Shah, Kinara Capital is a Bangalore-based non-banking financial company (NBFC) committed to providing innovative financial solutions to the MSME segment in India. Kinara’s current lending portfolio is $40.23 million across 9,000-plus customers.

Today, Kinara Capital provides local services in 50 locations across five states (Karnataka, Maharashtra, Tamil Nadu, Andhra and Telangana) and is in the process of expanding to Gujarat in Q3 2017.

"At Kinara Capital, we are proud of our efforts to expand financial inclusion to micro and small businesses in India by providing tailored financial products for their growing business needs," Shah said.   

"This new investment will help us deepen our reach in existing geographies and enhance our technology solutions to improve our efficiency. Our aim is to extend our support to more than 50,000 entrepreneurs across 100 cities in India by the end of 2019," she added.

Kinara Capital’s typical customer is often a first-generation entrepreneur with five years of work experience and an average business turnover of Rs 1-20 lakh a month. The company funds a wide range of MSMEs with a focus on manufacturing businesses in sectors such as auto parts, machine components, electrical components, kitchen appliances, food products, packaging products, plastics and more for asset purchase and working capital needs. More than 90 per cent of Kinara’s portfolio is in urban and semi-urban regions. It provides loans in the range of Rs 1-20 lakh to the MSME sector.

Kinara Capital has pioneered lending practices by innovating a financially inclusive solution to provide loans to entrepreneurs of micro-small-medium enterprises (MSMEs) without the need for property collateral. Founder and CEO, Hardika Shah, spent years as a management consultant globally and was motivated to help hardworking entrepreneurs who were systematically ignored by traditional lenders. She has created proprietary data driven risk assessment methodologies and incorporated smart solutions such as paperless loan processing and psychometric testing.

Shah was named an Ashoka Fellow for her innovative approaches in addressing the ‘missing middle’ Rs one lakh crore debt gap between microfinance and commercial capital. She also earned the Wall Street Journal’s Financial Inclusion Live Audience Award in 2017.