Financial Services
Diligence on an Online SME lender in India
23 Jan 2022
Context:
- An Indian PE player wanted to invest in a SME lending
Fintech and wanted to understand the market opportunity, credit model,
competition and analyze business model projections
Our approach:
- Defined the Indian SME Lending market landscape and
estimated its market size
- Management discussions to understand company operations and
business plans
- Analytics team discussion to deep dive into underwriting
algorithm and delinquency estimates
- Conducted In-depth Interviews with various stakeholders and
experts (N=25) to understand the nature of partnerships, benchmarking against
competitors especially on underwriting technology and product reviews
Praxis value delivered:
- Estimated the size of online led SME lending opportunity in
India, divided basis acquisition channels
- SME lenders have similar underwriting models and acquisition
channels
- Most SME lenders are following a hybrid marketplace
approach, wherein, they have their own NBFC alongside other financial
institutions to lend on the platform
- SME Fintech lenders have developed underwriting models to
provide credit to digital SMEs associated with anchors across the ecommerce
landscape
- Customers, anchors, and platform lenders shared their
feedback about the given target, and helped understand the team structure,
terms and profiles
- Unit economics for anchor led acquisitions of
digital SMEs suggest a profitable business
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