Indian fintech Lentra raises $60m to expand lending as a service to banks

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India first made a name for itself in the tech world years ago when it established a reputation as a key hub for business process outsourcing. Now that legacy has taken a very different turn in fintech with outsourcing of a very different kind, with the emergence of embedded fintech. In the latest development, Lentra, an Indian embedded AI-based funding startup, raised $60 million – a Series B that values ​​the startup at “over $400 million”, said D Venkatesh, Founder and CEO of the startup, to TechCrunch in an interview.

Existing investors Bessemer Venture Partners and Susquehanna International Group (SIG) led the round with strategic participation also from Citi Ventures, a subsidiary of New York-based investment banking giant Citigroup.

This is Citi Ventures’ first fintech investment outside of India, and this round underscores overall how far the fintech and integrated finance ecosystem has come in recent years. Lentra, which is profitable, has grown very rapidly. In 2019, its first year of operation, it recorded $1 million of its “annual consumption rate” – this term refers to the amount of revenue that Lentra makes based on the use of its APIs. As of this year, that figure rises to $10 million, and it is expected to reach $100 million in 2024.

The Mumbai-based startup is working with commercial banks to power their digital lending services. HDFC Bank, Federal Bank, Standard Chartered and IDFC First Bank are some of its major clients. Overall, Lentra has over 50 customers and has processed over 13 billion transactions and $21 billion in loans since launch. Venkatesh said the startup achieved all this growth without hiring a single sales manager until April this year.

The company’s mission is not unlike that of a number of other fintechs who have thrown their hats into the ring to work with – rather than completely upset and disrupt – legacy financial service providers, who found themselves unable to keep up with innovation by moving faster. , technology-based competitors.

“We want to help and empower banks, which are our customers, to lend better, to lend fully on a digital platform and to improve all metrics,” Venkatesh said.

These parameters are the same for banks all over the world. Yes, banks want to lend more and be more accessible to more potential borrowers – so move to digital platforms to help them scale and better compete with digital offerings. But banks have had their feet burned a few times already: they don’t want to take on a load of bad debt in the process of scaling, so they need better technology to improve the way they review borrowers, and also to have a better grip. on forecasting what they might expect to get in return (and losses) as a result.

The four-year-old fintech helps them do just that through a variety of lending tools. Lentra Lending Cloud, which provides out-of-the-box third-party API connectors to various data sources, as well as a loan management system (LMS) and a no-code business rules engine (BREx) with modules that customers can use out of the box. The startup also has a platform called GoNoGo in its catalog that helps banks determine if a loan should be granted to a customer once they have received their application.

Venkatesh said that in India, 90% of loan fraud happens through identity theft, where bad actors pose as someone with better credit to get a loan quickly. Lentra uses AI to triangulate data to identify potential fraud attempts.

“If you’re solving identity theft fraud, you’re minimizing the approach or position the bank will have towards a non-performing asset or a bad loan,” the founder said.

He said that while banks had only been able to cut the loan process – applying, processing and approving or declining applications – to six and seven days, Lentra’s technology cut that time to seconds.

Even though a number of startups are trying to facilitate loans to banks, it’s worth noting that Lentra considers Salesforce to be one of its biggest competitors when it comes to originating loans.

“Our number one target is anyone who uses Salesforce to originate loans. We go there, we cling to them, then we convert them,” Venkatesh said.

Citi is not only interested in further tapping into India’s tech ecosystem, but also in leveraging it for its own global growth.

“Lentra is our first fintech investment in India, and we’re very excited about the team’s ability to develop and scale low-friction software solutions for lenders,” said Everett Leonidas, APAC Principal and Principal Investor. for Citi Ventures, in a statement. “As a global bank, we look forward to Lentra expanding its products and platform internationally.”

Venkatesh told TechCrunch that Lentra plans to use the funding to continue updating its platform, adding new features, and making it more robust and faster. The startup is also expected to expand beyond India and establish operations outside the country, starting with three economies in Asia: Indonesia, the Philippines and Vietnam. After the initial expansion, the startup plans to go beyond Asia and enter the United States

Offices in the three new Asian countries will become operational as early as January, the founder said.

Lentra has already had a presence in Singapore since acquiring AI startup TheDataTeam in June this year which had an office in Lion City. Venkatesh said the Singapore office will become the vehicle for the startup to enter ASEAN economies.

Along with improving the offering and expanding the business, Lentra plans to acquire complementary businesses. The founder told TechCrunch that his acquisition plans focus on three areas: robotic process automation, payment systems or solutions that aren’t regulated entities, and teams working on statistical modeling or building data. a heuristic model in statistics.

“Lentra enables lenders to fuel the dreams of millions of people through effective financial inclusion and credit decisioning,” said Vishal Gupta, Partner at Bessemer Venture Partners. “We were really impressed with the combination of their technological prowess and the business advantage that Lentra offers its customers. We look forward to helping them continue to realize their vision of becoming the most trusted and sought-after cloud-native digital lending platform, enabling customers to democratize credit through accurate decision-making and fast processing.

Lentra also has HDFC Bank as an investor, although it did not participate in the last funding round. Venkatesh said the bank could have invested but did not this time because it had to meet the Reserve Bank of India’s condition of not holding more than 10% in unrelated businesses due to the merger. with HDFC Group.

“We are delighted to support Lentra, which was SIG’s first Indian venture capital investment in 2019. Since SIG’s investment, Lentra has demonstrated superior metrics on revenue retention and has grown 20x, while with high capital efficiency. SIG is excited about Lentra’s next phase of growth as it commits to serving global clients,” said Bhavanipratap Rana, Investment Advisor at SIG.

The startup currently has Mumbai as its number one market, followed by Delhi, Chennai and Bangalore. It has a team of 500 people which is expected to grow to 800 people to support ongoing plans.

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