There are 36 million entrepreneurs in India. Most of them never succeed.
Simmi Sareen, an analyst at Morgan Stanley for twenty years, knew that the world of big finance was closed to most Indians. It helps to be in the same network as people with money: 78% of Indian entrepreneurs who raise follow-on funding are graduates of a few exclusive universities.
As one anonymous entrepreneur said: “There are really two Indias. I call one India – where the rich people are. I call the other Bharat – the original Sanskrit name for India. Most of the investor money is going to India. It doesn’t extend to Bharat.”
Simmi knew that the system was biased against lots of high-quality entrepreneurs. She left the world of big banking to start her own lending company with partner Balawant Joshi, Loans4SME.
Their innovation is simple but profound. When an entrepreneur applies for funding, they look at fundamentals like cash flow, rather than things like whether the business has collateral – a metric that favors entrepreneurs who come from family money.
This has made Loans4SME one of the go-to financial partners for India’s renewable energy and cleantech startups. To date Loans4SME has developed partnerships with 25 lenders, representing more than $100 million of committed capital.
Simmi and Balawant graduated Village Capital’s 2016 Fintech India investment-readiness program, where she met one-on-one with investors from Accion Venture Lab, SAIF Partners and Accel Partners, as well as PayPal senior leaders that offered their years of experience in product development and operations.
She said that as a first-time entrepreneur, the program helped her take a step back. “You get too involved in the day-to-day of just running your business. The workshop helped us step back and think of strategy.”
Simmi says that entrepreneurs have the answers to solving the world’s biggest problems. “If the existing solutions work, they would have already worked. New thoughts have to come in a new way.”