LendingKart’s Sudeep Bhatia on Using Technology for Financial Strategy

Sudeep Bhatia took on the challenge of being the CFO of Lendingkart at a time when the company had focused on profitability and building strong lending partnerships.

As part of Inc42’s CFOs In Tech series, which is powered by HSBC, we spoke with Bhatia from Lendingkart about how tech startups can maximize their growth through financial planning.

Bhatia believes startups are often hesitant to make decisions and deal with investors without the vision and experience of a CFO to manage compliance risks.

Like personal loans, SME loans have also gone digital. In a world where contactless services are becoming the norm, platforms such as NeoGrowth, Capital Float, Indifi, AyeFinance, Lendingkart and others are using technology and automation to help small businesses grow and grow. a time when banks and traditional lenders have tightened their lending criteria.

When lending to a business, the lender must assess the fundamentals of the business that require accurate and up-to-date information. Some MSMEs may not even have formal registers. There are problems if someone lends to a micro-entrepreneur in a remote area. The lender has to evaluate all of their transactions for a period of time to understand the health of their business. These are issues that B2B lending startups are solving, and meanwhile, some like Lendingkart are carving out profitability as well.

Ahmedabad-based Lendingkart doubled its turnover in the fiscal year 20 to 464 Cr INR, registering a growth of 113%, and reported a profit of 29.6 Cr INR after tax.

Since the arrival of a new CFO in 2019, Lendingkart is on track for an IPO in India. Lendingkart CFO Sudeep Bhatia, an industry veteran with over 20 years of experience, believes early innovation in fintech is the key to success.

“Fintech companies can grow multi-x in the early years. After that, a business’s growth is likely to cross the scale for a while in the second phase (just like a non-tech business) and then pick up again based on inherent technological strengths and capabilities. However, it is important for a technology-based business to create multiple points of contact with customers and customers. Once in the second phase, the natural progression is to get listed and go public with your business.

According to him, an IPO is an important step for any business and factors such as profitable growth, the ability to predict the growth path and corporate governance play an important role.

The culmination of technology and financial strategy

Fundraising is an important part of any startup’s growth journey, and CFOs are instrumental in navigating the world of investing, advising, and compliance. Indeed, the responsibilities of a CFO even extend to the use and exploitation of the raised capital to enter the next phase of growth.

“As long as you come up with strategic solutions to achieve your goals and thrive in the midst of the challenges of a growing ecosystem, you will have no problem meeting investor expectations.”

In 2019, Lendingkart aimed to raise 3,000 Cr INR in one year thanks to its banking partners and private investors. When Bhatia joined the business, he noticed that other businesses of the same size were only raising a fraction of that amount and it became difficult to grow with so much funding. The company would have to achieve five times the growth of its competitors to justify the dilution of capital.

“You can’t tackle these kinds of challenges around capital without benefiting from the in-depth industry experience gained over the years,” he said, adding that startups often falter here without the experienced leadership that drives the industry. finance.

He believes that a strong financial background is only the first step, but to protect the overall health of the business, a CFO must think not only financially, but also like a technology product manager.

“When I joined Lendingkart, I saw the opportunity to raise funds directly from large institutions under risk-shared partnership models. Needless to say, banks have large balance sheets, but there are gaps in reaching retail customers. Our sales force is to search thousands of applications every month through a digital platform, ”he added.

So, Bhatia’s first challenge as CFO of Lendingkart was to create a bridge for banks to use the reach of the lending technology platform and, in turn, help the startup grow its portfolio. of loans. His solution was to create a co-loan platform. Bhatia helped plan, execute, and even hire people to put together a 15-member team for the project. In hindsight, this idea turned out to be a major breakthrough for the company.

Lendingkart is proud to say that today they have created one of the best co-lending platforms with the potential to become the largest co-lender in the country. He added: “We are set to hit the INR 300-350 Cr monthly execution rate shortly, and 35% of our business currently comes from partnerships with these large institutions and banks.”

Compliance risks in lending technology

“When we talk about the lending industry, it’s very easy to switch if you’re running faster than you could. “

For Bhatia, numbers alone cannot determine the growth of a business. In fact, growth at the cost of capital may be the start of a journey south. It is imperative to align short-term success with the long-term vision and act on it. “If you grow the business focusing only on short-term goals without having a long-term view, then I think that can backfire,” he added.

And as Bhatia pointed out, even a small change in RBI guidelines can disrupt the entire lending industry. So it’s about having skills to manage compliance, financial strategy as well as technology. This is where a CFO becomes responsible for creating a balanced plan.

Sharing his insights, Bhatia said, “To create a plan for a lending business, you have to consider factors like the size of the market, where you are looking for your clients, the credibility of the clientele and whether you have the right resources to grow sustainably, while managing compliance and corporate governance.

He also believes these are crucial times for a CFO and that he needs to look at broader metrics to achieve desired overall goals. It becomes its responsibility to assess the risks and advise the stakeholders to take the right measures further.

Choose the right partners

Navigating sticky situations can often mean just finding the right partner to help break through. Businesses large and small use a number of services, platforms and partners to facilitate their work as they grow. Bhatia believes that while there are a number of tools available to support finance compliance, marketing and more, it is important to think, decide and choose the right banking partner.

He explained that the entire financial services ecosystem is interconnected where customers and banks are on the same axis. Growth is directly proportional and therefore the right banking partner will contribute to the success of the business in one way or another.

Where traditionally loans and funds are basic needs, banks are no longer limited to transactional partners. A startup today needs platforms to invest, technology partners, credit cards, 4D payment SDKs and more. A banking partner must therefore act effectively on all fronts, prioritizing the needs of customers. “Our banking partners help us serve our customers on multiple fronts, including making it easier to do business through current accounts, overdraft facilities, credit cards and insurance products that meet their holistic banking needs and meet their needs. sales representatives at different stages. “

Find the right financial strategy

Of course, no one solution fits all businesses. Bhatia stressed that startups need to identify the problem and then solve it with first principles in mind. How to directly access the solution in the fastest way. It could mean letting go of the transactional mindset while working with a startup. Instead of focusing on risk, they should pay attention to the vision and focus on strategizing to grow the business on multiple levels.

“At the end of the day, it’s about what works best for the organization and the integrity of the mission you stand for. As long as you continually work to accomplish this mission, all other issues become secondary. “


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Don F. Davis

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