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Venture capital funds Accion and SAIF Partners will invest $1 million in non-banking lender Aye Finance which serves small businesses.
“MSMEs represent a highly undeserved ‘missing middle’ market in India,” Accion’s President and Chief Executive Michael Schlein said.
Such enterprises are too small for commercial finance and too large for traditional microfinance, and hence do not get any working finance, he said.
In a joint statement, the venture capital funds said Aye will offer secured loans from $1,000 onwards to help fill the funding gap for MSMEs, estimated at $198 billion.
The north-focused company was founded by bankers Sanjay Sharma and Vikram Jetley and has already opened four branches in the last six months, it said, adding that over 300 enterprises have already been backed by the NBFC.
Aye serves enterprises working in clusters, which helps it manage costs, SAIF’s Managing Director Vishal Sood said.
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