DEG invests in MSME financier in India
News from 2019-12-30 / DEG
DEG equity investment in Indian fintech strengthens local SMEs.
In India, micro, small and medium-sized enterprises (MSMEs) account for around 30 per cent of the gross domestic product and employ more than 110 million people. But often there is no appropriate financing for MSMEs, which prevents them from growing.
DEG has now invested 5 million US dollars in the Indian fintech LivFin, which will use the funding to expand its operations.
Technology-backed supply chain finance
LivFin offers technology-backed supply chain finance for MSMEs. The start-up, founded in 2017, uses a highly efficient tech-based credit management and approval process. For this purpose it also works with mid-sized corporates. These act as anchors for MSMEs, which are either suppliers or distributors for the products finished by the SMEs.
With its business model, LivFin also reaches very small companies that previously had been unserved or obtained their financing from informal sources such as local moneylenders, which often implies enormously high interest rates for borrowers.
With this new approach, small businesses are able to access credit easier, while in addition, requiring less collateral compared to "traditional" bank lending.