Aye Finance Raises $37.18M to Support Micro Enterprises in India
Aye Finance, a rising startup from India, has secured $37.18 million in new funding led by British International Investment. The company, known for its digital lending platform, aims to help small firms grow their businesses and employees increase their incomes.
The Series F round, which brings Aye Finance’s total fundraising to nearly $200 million, also includes investments from Waterfield Fund of Funds and A91 Partners, an existing investor. This follows a successful Series E round in 2020, where the startup raised $27.5 million led by Alphabet’s CapitalG.
The startup was founded in 2014 with a mission to provide business loans to underserved micro-enterprises in India. This category of businesses often struggles to secure working capital from traditional lenders, such as banks. Aye Finance utilizes a combination of in-house technology and analytics to offer a variety of financial solutions to enterprises based on their specific needs.
Since its inception, Aye Finance has disbursed over $959 million of credit to more than 700,000 unorganized businesses. It competes with other startups like Capital Float, Lendingkart, and Indifi, who share the goal of providing credit to small enterprises in South Asia.
“We believe there is immense potential in lending to underserved micro enterprises, and the fresh capital will provide a strong fillip to our compounding story,” said Sanjay Sharma, co-founder, MD and CEO of Aye Finance in a prepared statement.
Aye Finance is just one example of many startups gaining traction in India due to the lack of credit options for small businesses. According to government data, there are over 63 million micro, small, and medium-sized businesses in India, contributing to 30% of the country’s GDP and employing over 123 million people.
Recognizing the importance of these businesses, the government has introduced initiatives to ease their credit requirements. However, many small businesses still struggle to obtain funding due to eligibility requirements and lengthy processes.
“Our investment in Aye Finance underscores our commitment to back companies that have a strong development impact philosophy and promote financial inclusion for India’s underserved groups,” said Gaurav Malhotra, Director for Financial Services at British International Investment.
The Gurugram-headquartered startup currently has offices in 22 states and has over $959 million of assets under management. In the first six months of the 2024 financial year, Aye Finance has already delivered a profit after tax of $9.59 million.
“Aye Finance is on a growth journey, and we are delighted to partner with BII, who have a deep understanding of the financial services sector in India,” said Sharma. “This equity raise is a testament to the strong conviction that investors have in a high-quality franchise such as Aye.”