Facing Problems In Getting Loans, This Is The Startup To Look For
“I never wanted to be restricted in one single function or role, therefore, entrepreneurship was the destination to fulfil this urge,” says Vaibhav Pandey, Co-founder, i2ifunding.
In India, Peer to Peer lending has been in occurrence from decades in offline mode and in informal manner. Therefore, participation on lending side was restricted to very few people having muscle power. This also resulted in increased cost of borrowing for borrowers. Pandey, who was looking for an idea to kick start something of its own, came across a similar situation which made him found i2ifunding in the year 2015.
This Startup is an online platform connecting verified borrowers looking for unsecured personal loans and investors looking for alternative investment opportunities for higher returns. They are trying to formalize activity and bring more retail investors to this platform by providing them with various services like background verification of borrowers, risk assessment, opportunity to diversify the risk by investing in small proportion of different loan requests, borrowers, and investors, legal formalities, tracking and monitoring of repayments etc.
Rolling In Money
i2ifunding has recently announced that they have secured Rs. 2 Cr in the angel round of funding, from bunch of industry veterans. The company did not disclose the amount raised in the current round. “This investment could not have come at a better time as RBI has talked about 2 Cr capital requirement for P2P players in the concept paper recently released for regulating P2P lending platforms in India and this funding would mean that we would be able to clear this requirement easily,” said Pandey.
Company plans to utilize the fund towards technology and geographical expansion. Manisha Bansal who heads strategy said, “We currently have investors from all across the country; however borrowers are limited to Delhi NCR, Mumbai and Bangalore. Our target is to expand to at least top 20 cities of India in next one year”.
Overcoming the Challenges
Creating a mark in the industry as an entrepreneur comes with a lots of hurdles. The same happened with Pandey who had to go through lots of challenges to establish his venture. Speaking about one of them, Pandey said, "Our biggest challenge has been hiring right resources within our limited budget.”
Elaborating further he said, “Apart from hiring, convincing customers about this new concept has been a challenge for us especially convincing investors. In India, retail investors have been cheated by many Ponzi schemes and chit funds in the past and they have become very skeptical about new investment products or concepts. But slowly and surly we have been able to convince lot of investors. Now people have started getting returns on their investments and they themselves are encouraging others to register on our platform and get maximum benefit out of it.”
On asking him about how he tackle all these challenges, Pandey said, “I believe in teamwork and whenever I am in the challenging situation, I share with my team and do a brainstorming to find an innovative solution for that challenge.”
All About How it Function
The entire process is transparent, quick and easy. Apart from providing end-to-end services, i2i diligently evaluates the credit risk of each of the loan projects, basis its evaluation, assigns risk category and recommends an interest rate for that project (a borrower has the option to borrow at an interest rate, which is higher than or equal to this rate). This ensures that borrowers as well as the investors are not clueless and are aware about the benchmark interest rate of a loan project.
In the process, the investors get an opportunity to earn higher ‘risk-adjusted returns’ while the borrowers get an opportunity to get funded at the lowest cost possible as per their risk profile and market-based demand.
With a small team of 15 people, this startup managed to get over 600 registrations within just 4 months of its operation. They have already closed funding of around 25 loans and have more than 100 investors committed to invest over Rs. 70 Lakhs. “We are looking to expand to all major cities of India in next couple of years. We are expecting to fund loans worth 50 cr. per month by the end of this year,” informed Pandey.
In India, Peer to Peer lending has been in occurrence from decades in offline mode and in the informal manner. Therefore, participation on lending side was restricted to very few people having muscle power. This also resulted in increased cost of borrowing for borrowers. But now with the emerging startups, this space is seeing an enormous amount of innovation, making masses life easy.
Moverover, P2P space in India has recently seen lots of interest after RBI came up with the concept paper on regulating the P2P lending market in India which will result in the rapid growth of the sector in the coming days.