A Unicorn In 18 Months

CredAvenue, an enterprise debt marketplace, on becoming one of the fastest fintech startups to become a unicorn and its aim to revolutionize the debt markets

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"It's an opportunity of a lifetime to genuinely transform a significant sector because, in India, debt markets are significantly under-penetrated," said Gaurav Kumar, founder and CEO, CredAvenue.

Company Handout

Founded in 2020, CredAvenue became India's fastest fintech startup to join the unicorn club with a Series B fundraising of $ 137 million in February 2022.

For Kumar, milestones like fundraising and turning a unicorn are only reminders of why he is on this journey. "In the last two years, we have been able to achieve a significant scale. But I think there is a lot more for us to build. Also, fundraise and valuation mean there will be more responsibility on me and my team," he said, explaining what the unicorn tag means to him.

However, what does it mean to his team, investors, family and friends? "The employees and investors have been seeing what we have been building from day one. I think for them, what really stands out is the opportunity, but definitely, it has made a major difference from outside, that is newer customers and for the pool of talent we want to hire," he said.

Identifying Market Potential

Kumar is a serial entrepreneur who has been in the debt markets now for the last 15 years. Before CredAvenue, he founded Northern Arc Capital, Vivriti Capital, Vivriti Asset Management. This played a small role in terms of setting up CredAvenue in 2020. "The core piece to our mind was largely that the debt markets have not deepened in India. One of the reasons for that is we lack the overall financial services infrastructure for enterprises to access debt markets. This led to the genesis of CredAvenue," he said.

CredAvenue is an enterprise debt marketplace that connects enterprises with lenders and investors. It aims to revolutionize and deepen debt markets by leveraging its five tech platforms that have been designed to cater to the requirements of both borrowers and investors. Those include CredLoan which offers term lending and working capital solutions for enterprises, CredCoLend which offers co-lending partnerships for banks and NBFCs, Plutus which offers bond issuance and investment for institutional and retail participants, CredSCF which provides trade financing solutions and CredPool which offers an end to end securitization and portfolio buyouts.

In addition, the company also offers portfolio management and monitoring services as a SaaS offering to its borrowers and lenders. CredAvenue currently has more than 2,300 corporates, more than 750 Lenders and has facilitated debt volumes of over INR 90,000 Crores.

Challenges and Opportunities

For most startups today, the opportunities to build something profitable are huge and the challenge around the capital is meager. "The government has been instrumental in promoting entrepreneurship. There is a focus on startups like us, on unicorns and the overall ecosystem today also sees startups and fintechs coexist, right? So the biggest change we are seeing is the coexistence of fintechs with the overall banking system and a lot of things have got accelerated because of that," he said.

So, he believes that challenges will be more about execution, market making, awareness and customer protection. "If you are going to the last mile, it is very important that your entire knowledge management, content Management awareness, customer protection, these are the things where fintech startups have to be absolutely paranoid because I think that is a core challenge on scaling up in the financial services space," he said.

The pandemic has also proven to be a blessing in disguise for many startups in the space. For CredAvenue, the pandemic helped particularly in creating the synergy between the existing ecosystem and the emerging ecosystem, that is between the banking ecosystem and the fintech ecosystem. "I think there's a lot of acceptance on co-building and co-partnering to scale this up. But more importantly, pre-pandemic, it would be unimaginable of a lender doing all of what we're doing today digitally, that is without meeting the customer in person or going and evaluating you in person etc. That has completely changed," he said.

While the pandemic has cut short the overall adoption time, it has brought in challenges to engage with the customer. "Also, many enterprises have had their own lion's share of challenges because of COVID," he said.

Life of an Entrepreneur

Like for any entrepreneur, every day is a challenge for Kumar too. "Everybody sees the good parts, that is the fundraise or the announcements. But, for the founder and the team, every day is a challenge," he said.

Being a fourth-time entrepreneur, for Kumar, it is the why that keeps him going. "That's what genuinely gets me out of bed," he said. He has also learned of having no sense of attachment to things that are not in his control, for instance, the valuation, fund-raising, etc.

"What gets me excited is what we are building and the why," he said.

Kumar also sees culture as top-down. He believes that it's extremely important that he is always amplifying the Why of existence. "And everybody in the organization should know the real amount of impact their work is creating on a day-to-day basis. I believe in a lot of empowerment of any leader who is coming on board. So for us, irrespective of your experience, everybody's in a leadership position because they're making decisions day to day," he said.

Wrapping up the interview, Kumar shared the milestones for the company going forward. This includes a 90 per cent customer NPS, scaling both credit revenue as well as a franchise globally and figuring out how to move to an 85 per cent to 90 per cent gross margin business. Besides, he also truly believes that everybody in the organization will soon hit some of their personal milestones as well.