Citi backs Indian SaaS startup Lentra as it plans to expand internationally • TechCrunch

India initially made a name for itself in the tech world years ago when it earned a reputation as a key hub for business process outsourcing. Now that legacy has taken a very different turn in fintech with outsourcing of a very different kind, with the rise of integrated fintech. In the latest development, Lentra, an integrated AI-based financial startup from India, has raised $60 million, a Series B that values ​​the startup at “over $400 million,” D Venkatesh, founder and CEO, told TechCrunch. of the startup. interview.

Existing investors Bessemer Venture Partners and Susquehanna International Group (SIG) led the round with strategic participation also from Citi Ventures, a subsidiary of New York-based investment banking giant Citigroup.

This is Citi Ventures’ first investment in a fintech outside of India, and this round overall underscores how far the fintech and integrated finance ecosystem has come in recent years. Lentra, which is profitable, has been growing at a very fast pace. In 2019, its first year of operations, it recorded $1 million of its “annual consumption rate”; this term relates to the amount of revenue Lentra generates based on the use of its APIs. As of this year, that figure is up to $10 million and is projected to reach $100 million in 2024.

The Mumbai-based startup works with commercial banks to power their digital lending services. HDFC Bank, Federal Bank, Standard Chartered and IDFC First Bank are some of its main clients. Overall, Lentra has more than 50 clients and has processed more than 13 billion transactions and $21 billion in loans since its launch. Venkatesh said the startup achieved all of this growth without hiring a single sales executive until April of this year.

The company’s mission is not dissimilar to that of a host of other fintechs that have jumped into the fray to work with, rather than completely change and disrupt, legacy financial service providers who have found themselves unable to keep up. with the innovation of faster movement. technology-based competitors.

“We want to help and empower banks, who are our clients, to lend better, to lend fully on a digital platform and to improve on all parameters,” said Venkatesh.

Those parameters are the same for banks around the world. Yes, banks want to lend more and be more accessible to more potential borrowers, so they are moving to digital platforms to help them scale and better compete with digital-first offerings. But banks have already burned their feet plenty of times: They don’t want to take on a bad debt burden in the escalation process, so they need better technology to improve how they screen borrowers and also to have better control. . in forecasting what they could expect to realize in returns (and losses) as a result.

The four-year-old fintech helps them do this through a variety of lending tools. Lentra Lending Cloud, which provides out-of-the-box third-party API connectors to various data sources, as well as a loan management system (LMS) and no-code business rules engine (BREx) with modules for clients to use outside. From the box. The startup also has a platform called GoNoGo in its catalog that helps banks determine if a customer should be given a loan once they receive their application.

Venkatesh said that in India, 90% of credit fraud occurs through identity theft, in which criminals pose as someone with better credit in order to get a loan quickly. Lentra uses AI to triangulate data to identify potential fraud attempts.

“If you solve identity theft fraud, you minimize the approach or posture the bank will have toward a nonperforming asset or bad loan,” the founder said.

He said that while banks had only been able to reduce the loan process (apply, process, and approve or deny applications) to six to seven days, Lentra’s technology has reduced that response time to a few seconds.

Even though a number of startups are trying to make lending easier for banks, interestingly, Lentra sees Salesforce as one of its biggest competitors when it comes to loan origination.

“Our number one target is anyone who uses Salesforce for loan origination. Come on, we hold on to them and then we convert them,” Venkatesh said.

Citi is not only interested in leveraging more of India’s tech ecosystem, but also in leveraging it for its own global growth.

“Lentra is our first fintech investment in India, and we are very excited about the team’s ability to develop and scale low-friction software solutions for lenders,” said Everett Leonidas, APAC Director and Principal Investor for Citi Ventures. , it’s a statement. “As a global bank, we look forward to Lentra expanding its products and platform internationally.”

Venkatesh told TechCrunch that Lentra plans to use the funds to continue updating its platform, adding new features, and making it more robust and faster. The startup is also set to expand beyond India and establish its business outside of the country, starting with three economies in Asia: Indonesia, the Philippines, and Vietnam. After initial expansion, the startup plans to go beyond Asia and enter the US.

Offices in the three new Asian countries will be operational from January, the founder said.

Lentra has already had a presence in Singapore since it acquired TheDataTeam, an AI startup, in June this year that had an office in Lion City. Venkatesh said the Singapore office would become the vehicle for the startup to enter ASEAN economies.

In addition to improving the offering and expanding the business, Lentra has plans to acquire complementary businesses. The founder told TechCrunch that his acquisition plans focus on three areas: robotic process automation, payment systems or solutions that are not regulated entities, and teams working on statistical modeling or building heuristic models within statistics. .

“Lentra is empowering lenders to power the dreams of millions with effective financial inclusion and credit decisions,” said Vishal Gupta, partner at Bessemer Venture Partners. “We were really impressed with the combination of their technological prowess and the business advantage that Lentra offers its customers. We look forward to helping them continue to achieve their vision of becoming the most trusted and sought-after cloud-native digital lending platform, empowering customers in the democratization of credit through accurate decisions and fast processing.”

Lentra also has HDFC Bank as an investor, although it did not participate in the latest round of financing. Venkatesh said the bank could have invested but did not this time as it had to follow the Reserve Bank of India’s condition of not holding more than 10% in unrelated businesses due to the merger with HDFC Group.

Currently, the startup has Mumbai as its number one market, followed by Delhi, Chennai, and Bangalore. It has a team of 500 people that it intends to grow to 800 to support ongoing plans.

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