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India initially made its name in the tech world years ago when it gained fame as a key foreign exchange for business processes. Now that legacy has taken a very different turn in fintech. In a recent development, Lentra, an Indian embedded AI-based finance startup, has raised $60 million – a Series B valuation that values the startup at “over $400 million,” the startup’s founder and CEO D Venkatesh told TechCrunch. Interview
Existing investors Bessemer Venture Partners and Susquehanna International Group (SIG) led the strategic participation from Citi Ventures, a subsidiary of New York-based investment banking giant Citigroup.
This is Citi Ventures’ first fintech investment out of India, and this round highlights how far the fintech and inclusive finance ecosystem as a whole has come in recent years. The profitable Lentra is growing at a very fast clip. In the year In 2019, its first year, it recorded $1 million in “annual revenue” — a term that refers to the amount of revenue Lentra earns based on the use of its APIs. So far this year, that figure is up to $10 million and is expected to reach $100 million by 2024.
The Mumbai-based startup works with commercial banks to enhance their digital lending services. HDFC Bank, Federal Bank, Standard Chartered and IDFC First Bank are some of its major clients. In total, Lentra has more than 50 clients and has processed more than $13 billion in transactions and $21 billion in loans. According to Venkatesh, the startup managed to achieve all this growth without hiring a single sales executive till April this year.
The company’s mission is to grow with fintechs that have thrown their hat into the ring — rather than fully disrupt — and fail to keep up with innovation from moving at the pace of legacy financial services providers. , technology-enabled competitors.
“We want to help and encourage the banks that are our customers to give better loans, lend fully on the digital platform and improve on all parameters,” said Venkatesh.
These parameters are the same for banks all over the world. Yes, banks want to lend more, and to be more accessible to more borrowers – so they’re moving to digital platforms to help them better scale and compete with digital-first offerings. But banks often have their feet on the fire: they don’t want to burden bad debt in the appraisal process, so they need better technology to improve how they screen borrowers and better handle them. Predicting what to expect in return (and losses) as a result.
The four-year-old fintech helps them do this with a variety of credit tools. Lentera Loan Cloud, which provides ready-to-use third-party API connectors to various data sources, as well as Loan Management System (LMS) and Codeless Business Rules Engine (BREx) modules for external use by clients. Out of the box. The startup also has a platform called GoNoGo in its catalog that helps banks verify whether a loan should be granted to a customer once they receive the application.
Venkatesh 90% of credit fraud in India is caused by identity theft, where bad actors pretend to be someone with a better credit record to get a loan. Lentra triangulates data using AI to detect fraud attempts.
“If you solve identity theft fraud, you reduce the bank’s approach or position to non-performing assets or bad loans,” the founder said.
While banks were able to streamline the loan process — submitting applications, processing and approving or rejecting applications — in six to seven days, he says Lentra’s technology has reduced that turnaround to a few seconds.
Although several startups are trying to ease the burden of lending to banks, surprisingly Lentra sees Salesforce as one of its biggest competitors when it comes to loan origination.
“Our number one target is the person who uses Salesforce for loan origination. We go, we catch them, and then we change them,” Venkatesh said.
Citi is not only interested in tapping into the Indian tech ecosystem further, but is also interested in leveraging it for its own global growth.
“Lentra is our first fintech investment in India, and we are excited about the team’s ability to develop and scale low-friction software solutions for lenders,” said Everett Leonidas, Director and APAC Lead Investor, Citi Ventures in a statement. “As a global bank, we look forward to Lentra growing their products and platforms globally.”
Venkatesh told TechCrunch that Lentra plans to use the money to continue updating its platform, adding new features and making it more robust and faster. The startup is also set to expand beyond India and establish its business overseas, with three economies in Asia: Indonesia, the Philippines and Vietnam. Post the first expansion, the startup plans to go beyond Asia and enter America
Offices in the three new Asian countries will begin operations from January, the founder said.
Lentra is based in Singapore after acquiring TheDataTeam, an AI startup with offices in the Lion City, in June this year. Venkatesh said the office in Singapore will be a vehicle for the startup to tap into the ASEAN economy.
Along with improving its offerings and expanding its business, Lentra plans to acquire more businesses. The founder told TechCrunch that the acquisition plans are focused on three areas – robotic process automation, payment systems or unregulated entities and groups that work on statistical modeling or build heuristic models in statistics.
Vishal Gupta of Bessemer Venture Partners said, “Lentra is empowering lenders to advance the dreams of millions through effective financial inclusion and credit decision making. “We are impressed with the combination of their technological prowess and the business benefits Lentra is delivering to their customers. We look forward to helping them continue to achieve their vision of becoming the most trusted and sought-after cloud-native digital lending platform by empowering their customers to democratize credit with accurate decisions and fast processing.”
Lentra has HDFC Bank as an investor, though it did not participate in the last funding round. Venkatesh said the bank could have invested but didn’t this time because it had to follow the Reserve Bank of India’s condition that it would not hold more than 10% of unrelated businesses due to its merger with the HDFC Group.
The startup currently has Mumbai as its number one market, followed by Delhi, Chennai and Bengaluru. It has a team of 500 people with a target to grow to 800 to support the initiatives launched.
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