Finnovo Enterprises Private Limited - Start up Report

Contact Information
Ajay Kumar Sakamuri
402, Gayathri Apartments,Road No 1,

Banjara Hills, Hyderabad,India

+91 99593 69300

ajay@finnovo.in

www.finnovo.in

Industry
FinTech
Finance/Lending

Development stage
Startup

Year founded
2015

Number of Employees 
4

Funding Opportunity
INR 20M

Use of Fund
45% Product Development
25% Marketing/Sales
30% Operation/Inventory

Current Monthly Burn Rate
INR 42,000

Current Monthly Revenue
INR 0

Existing Debt
INR 0

Existing Investors
Self Funded – 100%

*terms and conditions apply

**terms and conditions apply

THE STARTUP

FINNOVO - Smart CashFlow Financing for the Smart enterprise.

PROBLEM/OPPORTUNITY

Local businesses, entrepreneurs, Micro, Small and Medium Enterprises (MSMEs) are not able to grow as much because of the delayed & irregular cashflows for the goods/services they have delivered. Not having access to formal banking system and depending on local money lenders is not helping the situation either.

These businesses/entrepreneurs currently do not have access to any formal banking system. Highly dependent on local money lenders to bring in working capital at high interest rates thus eroding their profits. The process of raising money against invoices (bill discounting) from banks is very tedious requiring an average of about 25 types of different documents. These businesses usually have 1-10 employees who neither have the expertise nor the management bandwidth. So they make do with private money lenders to start with as a stop gap arrangement, subsequently becoming a regular scenario.

SOLUTION/PRODUCT

Making short term credit available to these businesses by pledging invoices/ receivables as collaterals. With predictable cash flows, the businesses can better plan their growth and negotiate better with their suppliers and thus grow their revenue and profits. Allow investors to invest through the online platform.

The solution to this problem is to reduce documentation to a minimum, that too just once and using technology to service the customer regularly. The goal is that a customer should be able to send us an invoice through WhatsApp and will serve his financial needs in less than 24 hours.

NBFC Consolidation - At the last count, there are 36,347 NBFCs in India. Expecting this number to come down to 25,000 (a combination of consolidation & closing) in the next 7 months because of additional capital requirements (INR 10M which was by 31st March 2016 and INR 20M by 31st March 2017) and intense regulatory scrutiny. So there is an opportunity to capture a significant chunk of that market.

POTENTIAL RETURN/REVENUE MODEL

• 4.67 Million MSMEs producing Goods/ services worth INR 30 Trillion /year, with an asset base of INR. 13 Trillion, employing over 100 Million people, contributing 40% of Total Indian Mfg Output & 8% of Indian GDP, Growing 10-15% YoY.
• There are about 0.2 Million cab drivers on Ola and UBER platforms, currently not able to raise money from banks because of the nature of their jobs and businesses. These drivers have a regular inflow of money from Ola/Uber as part of their revenue share. At INR. 50k per driver requirement and 25% conversion, an opportunity of disbursing INR 1 Billion per year.
• Borrower – Interest rates 1.5% per month*.  Investor – ROI 18-36%**

COMPETITION

Loanzen, SMECorner, Getfiscal.in (India), Marketinvoice (UK), Fundera,Bluevine (US)

Risks & Mitigation:

Fake Bills By Vendors : Technology for invoice management (generation/approval), integration with customers’ accounting systems , predictive analytics, stringent control systems and processes.

Banks are better placed to offer these services : Not a core offering for a banks.Cannot afford value added services like sales ledger management.

No access to debt recovery platforms : Insure the loans , appropriate documentation to reduce default. Work with government to reform this industry , which directly benefits MSMEs.

EXECUTION PLAN/GO TO MARKET STRATEGY

• The website was launched in November,2015. Completed discussions with 3 customers (one each in healthcare, logistics and event management) with a total requirement of about INR 2 Million per month. Expect to complete documentation and disbursement by end of November.
• Discussing with drivers from Ola/Uber about funding against their receivables from Ola/Uber. Here the average ticket size is INR 10-50k and the idea is to pilot with 10-25 drivers depending on the availability of capital.
• Got mandate from two healthcare companies about financing their invoices to the tune of INR 50M. This can happen as soon as the money is raised.
• Discussions on with another 5 companies at various stages.

             Finnovo Differentiators

• Charges – Only financing charges. No other hidden charges.
• Productized Approach to serve each sector – Insurance receivables for hospitals, receivables from Ola/Uber for drivers, a short term receivables in event management, advance against rent receivables etc.
• Feet on the street approach to grow customer base along with digital marketing
• Partnerships with SME forums in CII (The Confideration of indian Industry), FICCI (Federation of Indian Chambers of Commerce), ASSOCHAM (The Associated Chambers of Commerce of India), NASSCOM (The National Association of Software and Services Companies), manufacturing, industry bodies etc.
• Controlled geographical expansion for better control on customers and deeper penetration.
• Easy documentation and faster response using technology. 

FINANCIALS

Starting with a capital investment of INR 3M. Target is to grow the loan size to INR 60M in year 2017 and INR 240M in the year 2018. Looking to raise funds to the tune of INR 20M from investors.

THE TEAM/RELEVANT EXPERIENCE

• Founder - Ajay Sakamuri, an alumnus of IIT Madras & NIT Jaipur, with over 11 years of experience managing P&L, BD, Operations, M&A on the buy side, Govt. business across Banking, IT & Healthcare sectors.
• Advisor - Dilip Gaza Rao (Advisor, 25 years in banking in SBI, SBI GE Cards and HDFC Standard Life).
• Tech Lead - Santosh K. (Graduate of NIT Jaipur and 12 years with various Information Technology in Infosys).
• Product & Analytics Lead - Anurag C. (Graduate of BITS Pilani & two years in a Pune based analytics company).