December 10th 2020: Four years ago, Indian business tycoons, Ratan Tata and Nandan Nilekani, joined hands to launch Avanti Finance, a social fintech start-up that hopes to serve 150 million unbanked households in India. To achieve this goal, Lalitesh Katragadda was brought in as its Chief Product and Technology Officer, Manish Thakkar as the Chief Operating Officer, and Rahul Gupta as the CEO. The company’s core product is the Avanti Platform, an open-access “digital financial spine", which helps its partners to create, curate, and deploy financial products in a touchless, presence-less, and cashless interface. In the form of an app, it is open for use to philanthropic funds, commercial sources, other NBFCs, MFIs, and banks.
Avanti Finance wants to help the financially excluded become a part of the mainstream financial system so that they are empowered to save, borrow, and receive benefits. Data suggests that only 80-90 million households in India are a part of the formal credit system which means that the rest — over 150 million households — are dependent on non-institutional sources, such as local moneylenders or acquaintances. These lenders, in the unorganised segment, levy exorbitant interest rates, creating a vicious cycle of poverty and asset loss. Avanti Finance wants to eliminate these lenders and help users avail products tailored to their economic needs without any hidden charges.
Although India is one of the world’s fastest-growing economies, access to credit remains one of the major impediments, resulting in low financial inclusion. For Avanti, the task will be offering its platform as a service to other financial institutions so that multiple pools of organised capital can be connected to the neediest users in a frictionless manner. According to Rahul, the start-up does not compare or compete with NBFC-MFIs as it believes that these will become important partners in the future to serve their end customers.
"We have built key assets—an agile platform, a strong partner network, and a mission-aligned team. Our product-market fit is strong and we have a high demand. Now, we have to execute to take the business to the next level. We must bring on an array of relationships that have the capital and use our platform to reach geographies and segments to help our users access financial products that enhance their livelihoods," says Lalitesh K, Chief Product and Technology Officer, Avanti Finance.
The start-up has raised more than Rs 102 crore from the NRJN Family Trust, and Rs 15 crore in debt from the Michael and Susan Dell Foundation. It is yet to find profitability. For additional growth capital, it is evaluating opportunities with impact investors and marquee global foundations. It claims to have disbursed a total of Rs 200 crore in loans to approximately 30,000 households, impacting around 150,000 people to date. "We started with small ticket loans solely for livelihood enhancements and will offer fit-for-purpose insurance and savings products in the future," states Rahul.