Interviews

Technology remains our key tool to provide high quality financial services to all at affordable costs – Alok Mittal

With over 20 years of operational and entrepreneurial experience, Alok Mittal has an accurate knack of understanding the needs of access to Small Medium business financing in India. This is what led him to establish Indifi, a platform for enabling debt financing for small businesses.

Alok is also an active angel investor, co-founder of Indian Angel Network, and on the board of TiE (The Indus Entrepreneurs) Delhi. Prior to starting Indifi, Alok setup and ran Canaan Partners’ operations in India, investing in high growth technology and internet startups. Earlier, Alok co-founded JobsAhead.com, a leading web-based recruitment business in India, which was acquired by Monster.com, the global leader in online recruitment.

Before founding JobsAhead, Alok worked with Hughes software in telecom and internet technologies. Alok is a computer science graduate from IIT Delhi, and completed his MS and Management of Technology programs from UC Berkeley.

Alok is passionate about creating value through startups! He is also keenly interested in entrepreneurship development in India.

Team IncubateIND in an email interaction with Alok Mittal asked him about Indifi`s future, what keeps him going and how is technology aiding his entrepreneurial journey.

Tell us something about your idea and what market size are you looking at?

I started looking for new ideas around June 2014, and SME lending platform was a space I was interested in. I was lucky to have met Siddharth, who has extensive exposure to SME lending space, and soon the debt-financing platform idea started gaining traction both from an interest and an opportunity perspective.

The idea was simple – solving the problem of lending for the millions of the fragmented SMB sector in India. The insight – small business data is available in supply chains and not in credit systems. Therefore, Indifi was incepted with the aim to substantially improve the experience that borrowers get in terms of speed of approval and disbursement, the convenience of the loan process, relevance of the loan product to their business needs, and finding the best rates in the market. Driven by the passion to bridge the gap in SME financing, Indifi has emerged as a technology strong enabler for small businesses to seek seamless access to funding.

What made you come up with this idea and how has the entrepreneurial journey been so far?

Small and mid-sized businesses in India are severely constrained for credit. There is an estimated $380B gap in MSME debt financing. The underlying reasons for this gap are the following:

  • MSME debt financing has been treated in a “one size fits all” manner, without much regard to the business of the MSME.
  • High operating costs and credit losses in the MSME space make it unviable for the current processes to expand access to credit.

Indifi is substantially improving the access to credit, experience that borrowers get in terms of speed of approval and disbursement, relevance of the loan product to their business needs, and finding the best rates in the market. Driven by the passion to bridge the gap in SME financing, Indifi has emerged as a technology strong enabler for small businesses to seek seamless access to funding.

Key facts:

More than 26% of disbursals by volume have been to borrowers who have had no or little credit history in the past

85% of our disbursements by volume have been of loan amount less than 10k USD

71% of disbursements by volume to proprietorship firms. By business type, proprietorship forms the largest segment in MSMEs but usually neglected by mainstream lenders.

Currently, in terms of market penetration where do you stand and where do you wish to take it?

Indifi has disbursed over 5000 loans across segments such as travel, hotels & restaurants, retail, e-commerce and manufacturing. Our assisted product offering is digital and gives us the leverage to provide loans across 150 locations. We are technology-driven company, and integrated with public and private data sources like credit bureaus, indiastack, etc. In 2 years, we will grow multiple fold in terms of borrowers we serve, and consequently in terms of revenue.

What are the challenges you face the most?

The key challenge at an early stage was to establish the thesis – the product market fit, as well as the operating model. Being in the fintech business, our second major challenge was to convince banks and NBFCs to adopt our proposed approach. We have substantially solved for the above, and are now focused on scaling the business. In an environment where bulk to SME lending has been done through outsourced origination, this requires us to build our own scalable distribution channels, and that is the core challenge for the company over next couple of years.

 What impacts does technology have on today’s economic growth?

In order to solve any large scale problem in India, we face tradeoffs between quality, accessibility and affordability. Traditional approaches have typically allowed us to achieve two of these three – for example, high quality banking at affordable costs is available but remains inaccessible to most. Technology provides for a tool to solve all three of these simultaneously. One such example is the telecom sector, which has substantially achieved all these three objectives simultaneously through use of technology. At Indifi, we believe that technology remains our key tool to provide high quality financial services to all at affordable costs.

A quote that keeps you going or motivates you through your entrepreneurial journey?

“It takes 20 years to make an overnight success” – Eddie Cantor

 Any specific advice for the new entrants in this space?

Lending is a very old business, and yet most people remain excluded from the system. This is not because the current providers don’t want to serve those customers. It’s because there are genuine constraints that make it hard to serve them. Entrepreneurs must focus on understanding these constraints and solving for them, if financial inclusion has to reach every Indian.

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