From London Banker to Lending ₹20,000 Cr: Harshvardhan Lunia's Lendingkart Journey 🚀
Lendingkart's Harshvardhan Lunia shares his journey building a ₹7500 Cr AUM fintech, lessons on MSME lending, fundraising & why conviction matters.
Harshvardhan Lunia, Founder & CEO of Lendingkart, wasn't always the fintech entrepreneur we know today. Like many from a "Marwadi Baniya community", the drive to build was perhaps innate. He recalls asking his father, "What are you building?" during morning walks and being fascinated by large hotels – businesses built on providing hospitality at scale.
Check out the video of the conversation here or read on for insights.
Despite a family background valuing academic ranks (where getting second rank meant missing out on pizza! ), Harshvardhan describes himself as the "black sheep" who rarely ranked first. Following a typical path – CA, followed by banking jobs at HDFC Bank, Standard Chartered, and ISB– he landed a coveted corporate banking role in London with ICICI Bank.
But the London job, the goal he'd worked towards until his mid-twenties, left him feeling unfulfilled. He missed the "chaos in India" and felt the quest to discover "who Harsh was" remained unanswered. At 27-28, he decided a lifetime in that role wasn't for him.
"I came back to India and started... I realized that this was an open space."
The First Innings: Learning the Ropes (and the Pain Points) 📝
Returning to India around 2010, Harshvardhan started an advisory firm, Domestic Finance & Investment Private Limited. This venture focused on arranging finance, particularly alternative modes like risk capital and working capital, for Small & Medium Enterprises (SMEs). He acted as a consultant, helping businesses prepare documentation and navigate banks to secure loans, typically in the ₹1-5 crore range, earning a commission of 0.5% to 1%.
The first year yielded almost no earnings; the second year, ₹5 lakhs. He built a small team and gave himself a deadline.
"I had given myself 999 days... If in 999 days you don't figure out a business or a model, shut it down and move on, try something else."
By the end of those 999 days, the advisory business was reasonably successful. More importantly, this experience gave Harshvardhan firsthand insight into the critical pain points faced by SMEs seeking loans: the agonizingly slow process (3-4 months) and the utter lack of transparency. He knew speed and clarity were paramount for these entrepreneurs.
The Pivot: Lendingkart Takes Shape 💡
Around 2013-14, the global fintech wave was building. Lending companies like Lending Club were going public in the US. Seeing this, and spurred by his own quest and the clear market gap he'd experienced, Harshvardhan decided to build a technology-driven lending solution for India's micro and small businesses.
He envisioned a platform leveraging technology and data analytics to automate the entire lending process – from application to underwriting and disbursal – drastically reducing the operational expenditure (OpEx) that made small ticket loans (average ₹5-6 lakhs) unviable for traditional banks.
"The idea was that technology will be the main driver for Lendingkart."
He structured it with a technology company holding an NBFC subsidiary, obtained the NBFC license in May 2015, and embarked on the Lendingkart journey.
Building Blocks: Data, Tech & Customer Obsession 🧱
Initial Capital & Traction: Harshvardhan borrowed nearly ₹1 crore from his father and brother to pilot the company, disbursing 49 small loans initially. This personal commitment likely gave early investors confidence.
Underwriting Evolution: The team quickly realised traditional financial statements (P&Ls, Balance Sheets) were unreliable for micro-businesses, often adjusted for tax purposes.
"We started realizing that bank statement or his transactions in bank statements for last 12 months were a critical source for us."
Cash flow became the key. Analyzing 12 months of bank statements revealed true business volume and health. For instance, an FMCG business doing ₹1 crore turnover likely earns ₹8-12 lakhs profit, regardless of the P&L figure. This banking data became the cornerstone of Lendingkart's underwriting. The challenge? Getting this data digitally, moving from scanned passbooks to PDFs, and finally leveraging Account Aggregator (which took years to mature).
Building the Algo: They started with rule-based systems, feeding data into algorithms. After disbursing about ₹1000 crores (around 20,000 customers), the algorithms began reliably predicting outcomes. Today, Lendingkart's data warehouse holds over 7 billion data points, and the algos predict outcomes with ~97.5% accuracy (in stable conditions).
Automation Pillars: The focus was on automating three key areas:
Origination/Distribution: Reaching and building trust with customers in remote locations (like Guwahati) digitally.
Underwriting: Evaluating creditworthiness using data and algorithms.
Collections: Managing repayments digitally.
Customer Focus: The core mantra?
"Customer is the CEO of the company. He can fire everyone."
Harshvardhan emphasizes solving the customer's problem: needing funds quickly (within days, not months), avoiding social stigma, and applying conveniently without shutting shop. This obsession, he believes, is the key to building trust.
Scaling Up: Funding, Growth & Co-Lending 📈
Lendingkart's tech-first approach and Harshvardhan's banking background resonated with investors, especially during the early fintech wave.
Seed: ₹4.5 crore raised without a presentation!
Series A (Early 2015): $10 Million ($6M equity, $4M debt). Harshvardhan recalls sending the term sheet almost reluctantly after being prompted multiple times by the VC.
Series B (2016): $20 Million
Total Funding: Over $228 Million in equity and significant debt raised over 10+ years.
Growth Trajectory (Disbursements):
Year 1: ~₹1 Cr
Year 2: ~₹9 Cr
Year 3: ~₹110 Cr
...leading to ₹5600 Cr in FY24
Total Disbursed: ~₹20,000 Crore to 3 Lakh+ customers across 4,500+ towns/cities.
The Co-Lending Boom: Lendingkart built a robust digital infrastructure for origination, underwriting, and servicing small business loans end-to-end. This capability became highly attractive to banks and larger institutions post-COVID. They wanted access to Lendingkart's customer base – ripe for cross-selling other financial products (home loans, credit cards, insurance) – but often lacked the efficient infrastructure to underwrite and service these small loans themselves.
Lendingkart launched its co-lending platform, '2gthr'.
Started discussions in 2018-19.
Gained significant traction post-COVID Wave 2 (mid-2021).
Co-lending grew from <10% to 65% of business by Dec 2021, and 80% by March 2022.
FY24 AUM: ₹7,500 Crore, with ₹5,500 Crore ( ~73%) via co-lending/securitization and ₹2,000 Crore (~27%) on Lendingkart's own books.
Lendingkart manages the customer experience end-to-end, while capital partners (banks/NBFCs) participate financially (e.g., 80:20 split). Risk is shared, often via First Loss Default Guarantee (FLDG) arrangements, though models are evolving. Underwriting is done by Lendingkart's algos and then verified by the co-lender's systems/algos within strict SLAs (e.g., 12-24 hours) to maintain speed.
Fundraising Wisdom from the Trenches 🧑🏫
Having raised significant capital, Harshvardhan shares candid advice:
Know Your 'Why': Early on, understand why people should rely on you. What unique experience or capability do you bring?
Conviction is Key: Especially when the wave isn't in your favor, your conviction in what you're building will be tested. Since startups build the unseen, your story and belief are paramount.
Storytelling Matters: Business is your conviction and the story behind it. How you communicate it is critical. Harshvardhan famously ditches PPTs for whiteboards, finding it connects better. Master communicating your vision clearly and passionately.
Fundraising is an Exam: Treat every investor meeting like an appraisal. VCs ask relevant questions based on their experience; use them to refine your story, but stick to your core conviction during the process.
It's Rarely Easy: Most founders struggle. Getting rejected by 25 investors before the 26th says yes is common. Don't expect easy checks; persistence is the norm.
First Impressions Count: Decisions are often made emotionally in the first 5 minutes; the rest is justification. Nail that opening.
Don't Chase Valuations: Focus on building the business.
"Every time I have gone out to raise money, people have told me, 'Talk to 25 investors, the 26th investor will put in the money'... keep on improving your story... But you need to have your conviction and you need to stick to it."
Harshvardhan Lunia's journey with Lendingkart showcases the power of identifying a real-world problem through direct experience, leveraging technology to build a scalable solution, and maintaining unwavering customer focus and conviction through the ups and downs of entrepreneurship. His story offers invaluable lessons for anyone navigating the Indian startup ecosystem.
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