Think Money: A Startup Aggregating Loans For SMBs

Starting a new company usually requires a huge sum pertaining to ventures that include development of the product, studying the market, building prototypes, identifying the target group, hiring, office space etc. Where do you get this kind of money? A company holds two options either they can raise an investment in exchange for equity or loan the sum from banks as a debt. Startups are usually new businesses still trying to shape themselves based on the product or service offerings. They hardly have any background information, success is doubtful (As 80% of startups fail), most of all sustainability can be a big risk. Due to these factors only a few investors willingly financially back them. What about the rest? Loan?

Loan is the money received today to be repaid in the future with interest, based on the discussed criteria. There are many sources to get loans- family, banks, investors or VCs, all can act as lenders. Many founders don’t even raise funds in exchange for equity as investors tend to interfere with the internal decisions and this hampers the growth of the company. While in loans, the lender’s involvement ends as soon as the borrower repays the loan. To make this process easy and feasible for startups, Think Money came into being.

About & Services

Founded by Abhinav Aggarwal, Rahul Sahani and Ajeet Madan in June 2015, Think Money was formed to create a digital lending platform for SMEs in India for securing finance for various business needs. The working model is pretty basic, user just needs to download the app, decide what loan suits him the most and fill in the questionnaire with basic questions like how old is it?, Industry, Financial details etc; the rest is done by the company.

ThinkMoney

From L-R: Rahul, Ajeet and Abhinav

Abhinav has 10 years of experience in banking and financial services sector. He has worked in various departments in ICICI Bank Ltd before venturing out on his own. He holds B.Tech (Computer Science) Degree. After working for 10 years in SME finance sector, he conceptualised the idea of “Think Money” mobile APP along with other co-founders. Abhinav is also co-founder of Qlique Mediatech along with Rahul Sahani.

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Think Money is aggregating loans from banks and providing free services to startups and SMBs. It is dealing in three loan types –

  • Loan Against Property (LAP): As the name suggests the loan is given or disbursed against the mortgage of property. The loan is given as a certain percentage of the property’s market value, usually around 40 percent to 70 percent.
  • Unsecured Business Loan: Lenders offer unsecured business loans, they don’t require a business to pledge any collateral to obtain the loan. However, one must still meet income and credit requirements. Unsecured business loans can range from Rs 2,00,000 to Rs 1,00,00,000, depending on the size of the business
  • Equipment Finance: When a business needs equipment, getting a small business equipment loan could be a smart financial move. The borrower can use these loans to purchase virtually any type of business equipment, but how much can one borrow? Now that depends on the type of equipment you’re buying and whether the equipment is new or used.

Monetisation & Traction

The company is providing free services to SMEs, they handle all the paperwork and coordinate with banks from login to disbursal. Users can track movement of their application in the bank. Once the loan is disbursed, Think Money then charges the banks. “We’ve tied up with many private banks, some of them include Citibank, IndusInd, Reliance, Standard Chartered, Edelweiss etc,” Abhinav said.

Since inception, the company claims to have catered to more than 20 SMEs assisting them to raise funds for working capital and expansion requirements. “We have mobilised than Rs.35.00crs since inception and generated revenue of approx Rs 32 lacs.”

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Mentioned below is range of payout percentage they get on different loan types:

Loan Against property (LAP) = 0.5% to 1.50% of loan amount disbursed

Unsecured Business Loan = 1.50% to 3% of loan amount disbursed

Equipment Finance = 0.50% to 1.25% of loan amount disbursed

He further added, “We are not marketing aggressively but once we gain the required funds we’ll be able to market this product.”

Funding Details & Market

On the same, Abhinav quoted, “We are seeking seed capital of Rs.25 million. We would like our investor to be a mentor and guide in making our Think Money app a success worth mentioning. We are in talks with some major PE funds as well as HNIs for investment.

According to government numbers, there are approximately 50 million SMEs in India, exercising frugal management skills and using local resources to create innovative products and services which cater to the country’s growing needs. Moreover, according to a report by the International Finance Corporation (IFC), the total financing demand gap in the SME sector is of Rs 2.93 trillion.

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