NEW DELHI -- Indian fintech startup PhoneParLoan has raised an undisclosed amount of funding from accelerator MOX, its co-founder Ashwin Bhambri told DealStreetAsia.
MOX is operated by SOSV, a U.S.-based venture capital firm with over $700 million under management. The PhoneParLoan investment marks SOSV's second capital infusion into the startup, currently valued at $7 million.
SOSV earlier invested in the startup in January 2019, along with a slew of Japanese and Chinese investors. Before that, PhoneParLoan had received funding from a few angel investors.
Although the current investment figure is small, the funding round highlights India's growing market for online lenders that cater to salaried individuals.
PhoneParLoan, which literally means a loan on a phone, doles out short tenure microloans of 1,000 rupees to 10,000 rupees (about $14 to $140) by connecting customers to lenders primarily in tier II and III cities.
According to estimates, there are currently as many as 300 million low- and middle-income salaried workers in India who often find themselves short of cash at the end of the month and need microcredit to buy groceries and pay bills.
The country's short-term credit market, Bhambri said, currently stands at 700 billion rupees and is expected to grow at 14% year-on-year.
PhoneParLoan was established in 2015 under Millennial Card Technologies to address India's contactless lending sector. For retail borrowers, it creates a single loan application that is accepted through APIs of multiple lenders.
The lender -- be it a fintech startup, nonbank finance company or bank -- benefits by receiving access to a pool of customers and all their details without spending anything on acquisition. PhoneParLoan also claims to have an alternate data credit score card for the new-to-credit or thin-file users that can be used by multiple lenders for credit decisions.
Other startups operating in the segment include Creditbazzar.com and QuickCredit.in.
PhoneParLoan will use the newly raised funds to improve its technology, ramp up head count and expand its operation, Bhambri said. "The idea is to reduce the friction between consumers and lenders."
"The profit-participating loan application is quite unique as it is complementary to both the borrower and the lender," said Anand Kumar, a corporate lawyer with Pier Counsel who has personally invested in the startup. "India is the best testing ground for such a product, [which] has global scalability."
New Jersey-based SOSV is no stranger to India's burgeoning startup ecosystem. According to media reports, it has made 20 investments in India over the past three years and plans to clinch at least 15 deals over the course of this year.
DealStreetAsia is a financial news site based in Singapore focused on corporate investment activity in Southeast Asia and India. Nikkei recently acquired a majority stake in the company.