Infinity Fincorp Solutions is on a mission to empower small businesses across India with a fresh infusion of capital that promises to expand its reach and impact. The company’s recent funding of $35 million could be a game-changer for India’s micro, small, and medium-sized enterprises (MSMEs) and the entrepreneurs behind them.

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The MSME Landscape in India: A Credit Gap Crisis

India is home to one of the world’s largest micro, small, and medium-sized enterprise (MSME) sectors. According to government estimates, MSMEs account for about 30% of India’s GDP, employ over 110 million people, and contribute significantly to exports. Yet, despite their immense contribution to the economy, India’s MSME sector faces a massive challenge: limited access to affordable credit.

For years, micro-entrepreneurs, particularly those in Tier III and IV cities, have struggled to secure financing from traditional financial institutions such as banks. The reasons are varied, ranging from stringent credit assessments, lack of collateral, to the underdeveloped financial infrastructure in smaller towns and rural areas. This has resulted in a credit gap that is estimated to be around Rs 78 lakh crore (approximately $1 trillion), a staggering amount that represents a major obstacle to growth for these small businesses.

This is where Infinity Fincorp Solutions comes into play. Founded in 2016 by Shrikant Ravalkar, the non-banking financial company (NBFC) has been a key player in providing much-needed financial services to underserved small businesses. With its new funding, Infinity Fincorp aims to bridge this gap and play an even more significant role in the growth and sustainability of India’s MSME sector.

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A Fresh Capital Boost: The $35 Million Investment

In a significant development, Infinity Fincorp has raised $35 million in a new round of funding, with major contributions from Jungle Ventures, Archerman Capital, and Magnifico. The company’s founder and managing director, Shrikant Ravalkar, announced that the fresh capital will be used to expand the company’s operations and increase its lending capacity. The investment comes with the approval of the Reserve Bank of India (RBI), signaling regulatory confidence in the company’s potential.

The $35 million capital infusion strengthens Infinity’s financial base and significantly boosts its net worth to Rs 530 crore. This, in turn, enhances the company’s capital adequacy ratio to 62%, far exceeding the regulatory requirement of 15%. With this robust capital position, Infinity Fincorp is now in a prime position to cater to the financing needs of a growing number of MSMEs, many of which remain underserved by traditional banks.

One of the most significant implications of this funding round is the fact that Infinity’s assets under management (AUM) have surpassed Rs 1,000 crore as of November 2024—a 33% growth from March 2024. This marks a critical milestone in the company’s journey and places it firmly on track to achieve its goal of Rs 1,300 crore AUM by the end of March 2025.

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Why Infinity Fincorp Stands Out

Since its inception, Infinity Fincorp has focused on providing financial products and services to micro-entrepreneurs and small business owners who struggle to access formal financing. These include small shopkeepers, tea stall owners, vegetable vendors, electricians, plumbers, and even small manufacturers based in India’s smaller cities and towns.

Unlike traditional banks, which often require high credit scores, significant collateral, or a long credit history, Infinity Fincorp uses alternative data and flexible credit models to assess borrowers. This allows them to support businesses that fall under the radar of most large financial institutions.

In addition, Infinity Fincorp takes a highly localized approach to its operations, with a network of 120 branches spread across eight states. The company has disbursed Rs 562 crore in loans in the past year alone, supporting thousands of small businesses. These loans help entrepreneurs expand their operations, purchase raw materials, hire workers, or invest in much-needed technology to streamline their business processes.

Infinity’s personalized service and community-based approach have helped it build a loyal customer base. Small business owners, who would otherwise have been left out of the formal credit system, find a reliable partner in Infinity Fincorp.

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The Path Forward: Infinity’s Growth Trajectory

The new round of funding and the continued success of Infinity Fincorp reflect the growing recognition of the need for alternative financing solutions for MSMEs in India. According to Ravalkar, the goal is to expand Infinity’s footprint and reach as many small businesses as possible, especially in underserved regions.

By leveraging the $35 million investment, Infinity plans to:

1. Expand its Branch Network: With operations currently spanning eight states, Infinity Fincorp aims to extend its reach to more Tier III and IV cities, where the credit gap is most prominent. More branches will help the company connect with entrepreneurs who are often isolated from mainstream financial institutions.
2. Increase Loan Disbursements: Infinity intends to increase the volume of loans disbursed to MSMEs. With its new capital, the company can significantly boost its lending operations, helping more small businesses thrive and expand.
3. Technology Upgradation: Infinity plans to invest in digital infrastructure to streamline loan processing, improve customer experience, and reduce the operational costs of lending. This will help them scale faster while maintaining operational efficiency.
4. Strengthen Risk Management Systems: With the increased volume of loans, Infinity will also focus on strengthening its risk management systems. This includes better borrower assessment tools, credit scoring models, and technology-driven collections and recovery processes.

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Investor Confidence: A Testament to Infinity’s Approach

One of the key investors in this funding round is Jungle Ventures, a leading venture capital firm with a strong track record in supporting companies with high growth potential in India. According to Arpit Beri, Partner at Jungle Ventures, the firm’s decision to invest in Infinity Fincorp stems from the company’s disciplined approach to lending and its strong portfolio quality. Even in a challenging market environment, Infinity has managed to maintain robust growth, which is a testament to its business model and leadership.

Beri also highlighted that Infinity’s focus on MSMEs aligns well with the company’s long-term vision to support underserved businesses that have the potential to transform India’s economy. This confidence is reflected in Infinity’s impressive financial performance. The company reported Rs 26 crore in profits for the 2023-24 fiscal year and is forecasting a substantial increase to Rs 47 crore for the current fiscal year (2024-25).

This positive outlook is further supported by the fact that Infinity has managed to maintain a high level of portfolio quality and low default rates, making it a low-risk investment even as it scales.

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Conclusion: A Bright Future for MSMEs

With its recent funding and strong backing from investors, Infinity Fincorp Solutions is well-positioned to continue its journey of empowering small businesses across India. By focusing on underserved entrepreneurs, leveraging technology to streamline operations, and maintaining a disciplined approach to risk, the company is not only filling a significant gap in the credit market but also contributing to the broader goal of economic inclusion.

As Infinity expands its reach and impact, it is set to play a crucial role in addressing the credit gap in India’s MSME sector. The $35 million infusion will help the company grow its AUM, increase loan disbursements, and ultimately support thousands of entrepreneurs who are the backbone of India’s economy.

The future of MSME financing in India looks bright, and Infinity Fincorp is at the forefront of this transformative journey.

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