Let us talk about funding. Funding is the way or the method of introducing cash in a business. We all know that cash is the most important aspect of a business because it is the cash that gives the business the flexibility to think and plan beyond the existing operations.
It is the different processes of funding through which a business can plan and introduce different verticals of its offerings. Through funding, a business can go international, it can cross the national borders. Funding helps a business in hiring more people and bringing in new and advanced technology.
But why do investors want to invest in a startup? Why do they want to give away their cash like this? In normal cases, the investors do not just invest in a startup or a business. When they invest their funds, they for that portion of funds take a particular share of the startup, and in some cases even get involved in the normal day-to-day functioning and decision-making of the business.
Sometimes, investors also become part of the board of directors of a startup. And most important point which needs to be remembered is that investors do not invest in any startup, they need to find the potential and zeal in a business plan. They need to be sure that a startup will have a future and has the capacity and the ability to expand and move forward, then only funding and investments are made.
Now, we should discuss the funding process of a trade financing platform that has taken place recently.
Announcement of funding
The startup, Vayana Network, has raised a funding of INR 283 crore. This round of funding was the Series C round of funding and was led by Chiratae Ventures, CDC Group, Jungle Ventures, March Capital, and Marshall Wace. This round of funding also witnessed the participation from various family offices in India and out of the country (abroad).
The startup previously had raised USD 4 million in its Series A round of funding. The investors in that round of funding were Jungle ventures and Chiratae Ventures.
About the newly funded startup
The startup, Vayana Network, was founded in the year 2017 by Ram Iyer, who is also the CEO of the startup. It is a B2B financial intermediary which is engaged in connecting SMEs and corporates with different financial institutions. This is done so that the loans can be traded at a low cost. The startup also helps by providing other services like GST(Goods and Service Tax), e-way bill, and e-invoice for a number of corporate businesses and small and medium enterprises which are numbered in lakhs.
Currently, the startup connects more than 1000 corporates and their trade ecosystems with the motive of providing digital and affordable access to credit for their payables and receivables. The business model of the startup is like a way that it makes money by charging a nominal fee from its borrowers and then taking a cut of the interest rates which banks charge the traders. The USP of the startup is that it charges low-interest rates, and it is the cheap interest rates that have helped the startup in retaining its customers for a long time.
The startup holds more than 20 percent of the market share in e-invoicing in India and helps businesses in lowering down credit costs by more than 50%. The startup is currently operating in the US, Singapore, Thailand, Malaysia, Vietnam, and Indonesia, and it has plans to expand to many more countries. The startup claims to have facilitated USD 8 billion in loans to more than 22,000 MSMEs, for more than 1,000 supply chains across 25 different sectors.
What has been said about this deal of funding?
The founder and the CEO of the startup, Vayana Network, Ram Iyer, made a comment saying that the startup believes in every part of the supply chain and for every type of trade, a required and relevant product needs to be there that gives the opportunity to the business to grow sustainably. He further said that the startup has a strong presence in credit enabling infrastructures like GST and e-invoicing, and Good Business Score (GBS) which has recently been launched has been added to the list. Because of all these, the startup has been able to reach the smallest of businesses and connect them to the largest lenders.
TC Meenakshi Sundaram, who is the managing director and co-founder of Chiratae Ventures made a statement, in which she said that MSMEs have a very important role in being the growth engines of the economy, across the world, and especially in our country, India. In spite of all this, MSMEs suffer from delayed payments and there is no access to low-cost formal sources of finance.
She further said that the startup not only gives the access but also works towards making MSMEs credit ready through its GST compliance and analytics business.
The startup is solving a major issue, and we wish the startup nothing but good luck and a bright and successful future ahead.
edited and proofread by nikita sharma