Creating a digital platform for lending to

under-served SMEs in India

Capital Float is the trade name of Zen Lefin Pvt. Ltd., a non-banking finance company (NBFC) registered with the RBI
 SME FINANCE IN INDIA: THE PROBLEM

Drivers for SME growth in India have never been … But access to finance for SMEs remains
stronger… woefully inadequate

Total debt demand from SMEs

Manufacturing (30 million enterprises)
“Make in India”
Currently met by Banks
& NBFCs
Digital Ecosystems 16%
Shift to organized retail and e-
commerce; taxi aggregators etc.
Rs.33
Trillion
Digital penetration
Smart-phones and faster internet
84%

Financial inclusion Supply Gap

Penetration of banking and
payment services Rs.26.5 Tr (~$400 Bn) of SME debt demand
unmet by formal channels

Source: MSME Census and MSME Ministry Report CAPITALFLOAT |

WHY TRADITIONAL LENDERS ARE STRUGGLING WITH MSME’S

Lack of focus One-size-fits-all approach

Inherent bias against small-ticket lending. Limited product innovation and
MSME business secondary to mid-corporate customization for what is a highly
heterogeneous segment

Slow processing Outmoded underwriting

Cumbersome, time consuming processes. Largely manual, vanilla risk assessment
SMEs need fast and convenient access to approach with rigid credit and collateral
credit parameters

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LARGE UNADDRESSED MARKET
Interest Rate Interest Rate
10-18% 25-30%+

Interest Rates
~16-24%

Banks & NBFCs Unaddressed Market Niche / Informal Lending

1. Typically with credit scores above 1. Scores 600-700 – careful but quick evaluation needed 1. Credit scores below 600 or non-
700 existent
2. Varied product needs - Short term & Long Term
2. Can get pricing of 10-18% from 2. Get pricing of >25-30% from
3. Pricing Precipice: 16-24%
banks niche/local lenders
4. Large Geographical spread
3. Existing business & credit history 3. Typically need short term loans
5. >60% not regular internet users
4. Larger companies with available
collateral 6. Lack of understanding of financial products (handholding) / Documentation
gaps

Able / Willing to address <5% of ~90% market unaddressed by existing Able to address <5% of
the market financiers the market
CAPITALFLOAT |
 THE CAPITAL FLOAT SOLUTION
Only player addressing the 90% ..

Customer Characteristics / Needs Funding

Wide Reach Efficiency
Scalability
1. Scores 600-700 – careful but quick evaluation needed

2. Varied product needs - Short term & Long Term • Innovative products for varied • Low delinquencies enabled by • Rapid book building via well
SME customer needs hybrid human-machine reputed partners
3. Pricing Precipice: 16-24% underwriting
• Partners – to reach all ‘online’
4. Large Geographical spread SMEs & open new market • Efficient processing via
segments automation of business
5. >60% not regular internet users (not possible to target processes
online only) • Customer Service/ UX model
• Low acquisition cost with
6. Lack of understanding of financial products targeted lead generation &
(handholding) / Documentation gaps conversion

Technology Platform

Capital Float’s robust technology platform enables a scalable SME lending model
CAPITALFLOAT |
ECOSYSTEM LENDING APPROACH
Initial focus on high-growth, SME-centric ecosystems with 3 key features

I. Aggregators to build
Current focus areas
scale with

• B2C E-Commerce

• Transportation

• Payments / POS

• Industry Buying

• Travel & hospitality

• SME services

II. Differentiated data III. Cash flow visibility /

sources control

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UNDERWRITING: DATA SOURCES

Credit bureaus E-Commerce portals Social media

At a personal level, has the entrepreneur Is product selection competitive? What are What are customers saying about this
been a responsible borrower in the past? return rates? How have sales been growing? business? How strong is its online footprint?
Ratings?

Financials and tax returns Banking transaction history

What is the overall financial health of the Risk Models What is the cash flow profile of the business?
business? Are taxes being paid on time? Are payments timely? Do cheques clear?

Accounting software Psychometric assessment Government databases

Automated integration with popular How able is the entrepreneur? What are their Automated integration with
accounting tools such as Tally and attitudes towards risk and repayment? MCA, RoC, NSDL, and Aadhaar databases for
Quickbooks verification

CAPITALFLOAT |
CUSTOMER EXPERIENCE: BORROWER

*Our objective is to enable execution of Loan Agreements in a paperless manner (Virtual Loan Agreement) – this is subject to appropriate acceptability in an
Indian context
CAPITALFLOAT |
BUSINESS MODEL DRIVING LOWER COSTS

Traditional Lender
Operating Expense: 5-7%
Operating Expense: ~2%

Technology and business model

drive cost down

CAPITALFLOAT |
LEADERSHIP TEAM
Key Team Members

Gaurav Hinduja Sashank Rishyasringa Rohan Angrish

Co-Founder Co-Founder CTO
(Ex: COO, Gokaldas Exports; Stanford (Ex: Sr. Manager, McKinsey; (Ex: Chief Architect, Open Table; Oracle;
GSB) Princeton; Stanford GSB) IIT; Stanford)

Tushar Garimala Ankit Satsangi Utham Reddy

Decision Sciences Credit Product
(Ex: Sr. Manager, Capital One U.S.; (Ex: SVP Unsecured Loans, Fullerton; (Ex: Product Manager, Excellere; Wipro;
HSBC; IIT) Barclays; Citi) LSE)

Kumanan Rajgopal R.N. Murthy Kshitij Shrivastava

Sales - E-Commerce Sales - Retail Marketing
(Ex: Head of Merchant (Ex.: Head of MSME (Ex: Brand Marketing Head, Mattel Inc.;
Acquisition, AMEX; ICICI) Sales, Janalakshmi; Indiabulls) P&G)

Aman Bhargava G.R. Prasad Vaibhav Singh

Capital Markets Operations Business Development
(Ex: Director, Grant Thornton; E&Y; (Ex: Head of Operations, Vistaar Finance; (Ex: Sr. Manager, Deutsche Bank Asia-Pac;
KPMG) Fullerton India) CFA; IIT)

CAPITALFLOAT |
JOURNEY THUS FAR
~INR 200cr loans originated nationwide, partnerships with leading marketplaces

Key business metrics Ecosystem partners

E-Commerce finance:
• ~INR 200cr in loans originated till-date

• 500+ SME borrowers across 40 locations in India

(Tier 1, 2, 3 cities)
Auto loans: Other SME financing tie-ups:
• Currently adding 100 new customers per month
(INR 30cr new originations)

• < 0.1% NPAon current portfolio

Investors
• Target - INR 50 cr new originations per month
(run-rate) by April 2016
$17 million raised till-date
(Seed + Series A rounds)

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DIGITAL LENDING LANDSCAPE

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Thank You