It was 2011 when Harshvardhan (or Harsh, as he’s informally known), decided to leave a cushy banking job in London to launch his fintech startup in India. It was a decision that baffled most, except perhaps his mom who was delighted that he would be able to eat ‘ghar ka khaana’ again.
Harsh went on to first form an advisory platform that matched lenders and borrowers which didn’t scale up as planned and he made the prudent decision of shutting it down. Realising that the true value lay in serving the underserved borrowers, Harsh went on to start Lendingkart in 2014.
In less than six years, Harsh has not only managed to start a lending platform for SMEs and first-time borrowers – a space that traditional banks shy away from – but his startup, Lendingkart, has also evaluated nearly half a million applications, disbursing over 70,000 loans to more than 55,000 MSMEs in over 1,300 cities across all 29 states and union territories. Last year, LendingKart even realised a profit of 35 crores.
The moment of transformation
When Harsh returned to India, he observed that businesses and SMEs around him were being run by the younger generation. Noticing a huge gap that the existing financial models weren’t able to solve, the idea for Lendingkart slowly started taking shape. “These are people who do not have the capital and resources, but can run a business and are in need of working capital. We had realised that the traditional banks and NBFCs weren’t the best option as they look at the borrower as someone who will possibly default. But at Lendingkart, we reversed this thinking by looking at small business owners as potential customers first and worked on what was the best way we could make it work for them.”
“Out of all l the 70,000 loans disbursed, we have had only 38 frauds,”
On finding trust where there wasn’t any
Starting up wasn’t instantaneous, Harsh reveals, but rather a result of years of observations, insights and working closely with the target segment. What he noticed was that small business owners were keen on putting in the hard work and effort to make their businesses work, and were therefore earnest and diligent in paying back their dues, rather than defaulting on them, more often than not. “It was a question of putting myself in their shoes and trusting them,” he says.
“Conventional banking tends to look at customers in this particular segment as defaulters first. At Lendingkart, we reversed this thinking by looking at small business owners as potential customers first and worked on what was the best way we could make it work for them.”
Harsh also realised that he needed to have a more cost-effective process of verifying products because these loan amounts were smaller compared to traditional loans . This meant relying on education, documentation and transaction history as deciding factors instead of meeting face-to-face. . “We’ve never met face-to-face with 99 percent of our customers, and yet we’ve been incredibly successful with our repayments. Seeing customers repay our trust in them by paying us back was our ‘aha’ moment,” he says.
Business Growth Transformation
The one thing that has always underscored Lendingkart’s operations is their obsession with their customers instead of their competition,says Harsh.“We constantly look at how we can improve things for our customers – how can we address their needs better, faster and at scale. It’s also important to understand your strengths, play to them and improve them. My underscoring business philosophy has always been ‘inch-wide and mile-deep.’
Harsh also alludes to his ‘marwadi genetics’ in helping him view his startup from a lense of profitability. He adds that he would often refer to his dad’s business approach, but temper and interpret them in the modern context and current business dynamic.
The role of tech in the transformation
Technology has played a key role in Lendingkart’s value proposition, given that their application process is 100 percent online and takes just 15 minutes to complete. And while AI also plays a role in powering their insights, Harsh says he can’t ignore the role of intuition in their growth journey.
“Algorithms and AI are a way of processing data faster, but the core of the work remains with identifying and reaching out to a segment. While we use a lot of algorithms to identify the right kind of customer, a lot of data particularly in the segment is unavailable and sometimes questionable, so it’s important that tech is backed up with on-ground and hands-on work for better reliability in the current Indian market dynamic,” he adds.
Talking about how convenience plays a major role in the success of a startup, whether it’s a mobility or a fintech startup, Harsh says that it was important to leverage tech to continue to make their solution even more convenient for their customer. “Given that our assets are mostly digital these days, if our processing time is three hours, we need to figure out a way to make it three minutes. If a disbursal time is three days, we need to figure out a way to make it three hours, and so on, and technology is the key to approach this” says Harsh.
“If you provide a service right, the customer will come back to you. Also, the fact that you were the first to see potential and extend trust to a customer, always stands you in good stead in the long run,” he adds.
The qualities that make a great leader
“You might be a founder or a CEO, but It’s important to also engage and work with colleagues at their level, adds the entrepreneur. “You might have a private jet, but it helps to fly economy class with them. You might be able to afford a five-star lunch, but it’s always better to share a home-cooked meal with colleagues at work,” says Harsh, adding that this philosophy was not based on frugality but on empathy, and helped one truly connect and be a great leader.. “As startups scale there is an indirect proportion to cost and growth. I find that when managers don’t get preferential benefits or treatment over their team members, it adds to the inclusiveness of the team. You simply have to walk the talk as a leader,” he adds.
The role of culture and profitability
Karan believes that culture has a key role to play in the efficiency and profitability of a company and that onus on o the founders and leaders. . “If I don’t show frugality and hard work in my work ethic, it will spill over to the rest of my employees. If I don’t appreciate people’s time, or don’t appreciate the value of time, I can’t expect my colleagues to do the same.” He explains it further by saying that if a leader took an elaborate two-hour lunch, it wouldn’t bore well for employee morale if his team members had only 20 minutes. “Everybody watches you, everybody forms an opinion based on what they see, and eventually they form habits based on what they observe. So if you roll up your sleeves and put in hard work, the team will follow suit. Integrity, respect,and trust are key factors in our organisation,” he adds.
The lessons being an entrepreneur teaches you
“The journey and not the destination is important,” says Harsh. adding that eCommerce and mobility have gone through their learning curves and now it’s the time for fintech to do the same. While there will be competition, churn and possibly tough times for the sector, he says it’s important that founders truly enjoy what they do, be patient, persevering and have the ability to be constantly excited about what they do. “This is invaluable if you want to have a good night’s sleep.
”.Follow your heart, don’t look back. and have no regrets,” Harsh signs off.