LoanZen Pvt Ltd, which runs peer-to-peer lending marketplace LoanZen, has raised an undisclosed amount in seed funding from angel investors through Tracxn Syndicate, an angel network launched by Tracxn.
LoanZen helps businesses which are less than three years old or do not have collateral meet short term cash-flow gaps by getting them short tenure (up to 120 days) loans.
LoanZen currently offers its services in Bangalore and plans to expand to Mumbai and Chennai by April 2016.
“Tracxn Labs' own network and knowledge of the fin-tech space has been hugely helpful as we built out and launched the product,” said Madhu Sudhan, co-founder, LoanZen.
The startup was founded in September 2015 by IIM Bangalore alumni Madhu Sudan and Venkatesh Sankararaman, and Ritesh Kadmawala, a computer science graduate from University of Southern California.
The founders say businesses that have traditionally been left out of the banking infrastructure are now connected with lenders with the help of LoanZen's credit scoring model.
“Our mission is to enable small, new-age businesses to succeed and we see credit as a key element that today prevents them from reaching their goals. We are building the technology and data infrastructure that will be required for the larger lending ecosystem to be able to address this market," Sudhan adds.
For the lenders, the company provides a beneficial platform by using technology and data to score credit applications in real-time using a variety of data sources – banking, accounting, public data, and social data. Through LoanZen, lenders will be able to lend to companies that have invoices on quality buyers, thereby saving on costs and effort of finding borrowers, evaluating and credit scoring them.
"At LoanZen, we are excited about leveraging data to enable lending to a large, hitherto unbanked segment of businesses requiring cash flow gap financing,” Ritesh Kadmawala, co-founder, LoanZen, added.
As per a study conducted by World Bank investment arm International Finance Corporation (IFC) in conjunction with Small Industries Development Bank of India (SIDBI) and Reserve Bank of India (RBI), the market for unsecured short term loans is estimated at $120 billion.
The P2P lending space has been brimming with funding activity in the last six months.
Earlier this month, Wiseworks Technology Pvt Ltd, which runs digital lending platform Capzest, raised $200,000 in a seed funding round led by Lion Ventures.
Finectar Technologies Pvt Ltd, which runs online lending marketplace KountMoney, had raised an undisclosed amount in seed funding from Suashish Diamonds Ltd’s CMD Ashish Goenka and other investors through angel network Tracxn Syndicate in November 2015. Loanbaba has also raised $320,000 in seed funding from an unnamed angel investor in the same month. IndiaLends, an online marketplace that connects lenders and borrowers for unsecured loans had raised $1 million in a bridge investment round led by existing investors DSG Consumer Partners, Siddharth Parekh and Gautham Radhakrishnan in October last year. In September, Loancircle.in raised an undisclosed amount in angel funding from Toppr.com co-founder Zishaan Hayath, Trifecta Capital’s managing director Rahul Khanna and other investors.