Bi-country based micro-lending platform Milaap, which relies on crowdsourcing, has managed to raise US$ 1.1 Million (Rs. 6.6 Crores) in funding from multiple people in their individual capacities & Jungle Ventures, who have taken a keen interest in the prospect the platform offers. This round appears to be the company’s first major funding since it had raised US$ 250,000 in seed funding from USF, First Light Ventures & other individual entrepreneurs.
The list of the investors is remarkable as it includes besides Jungle Ventures, Toivo Annus (co-founder & former head of Engineering, Skype), Lionrock Capital (a Singapore-based family investment office), Jayesh Parekh (co-founder, Sony Entertainment Television also managing partner, Jungle Ventures ) and existing investor, Unitus Seed Fund (USF).
What’s so appealing about Milaap?
The company though based in two countries, India & Singapore, does a remarkable job of generating finance for small companies & micro startups in India. While there are multiple agencies involved in similar practices, including all major banks, Milaap stands apart since it deploys a crowdsourced platform to raise the capital.
Milaap does fundraising from people and disburses those funds as loans to businesses. These loans have a typical repayment schedule lasting about a year or two. Perhaps the lenders may not be happy in terms of the financial aspect of the platform, since they merely get back their investment & that too spread over almost 2 years. But these people might be investing solely from the point of view of helping other budding entrepreneurs get a secure bearing.
The returns are low solely because Milaap isn’t running a business of making money by lending it & subsequently earning in the form accrued interest. Milaap charges half of what commercial banks do. The earnings for Milaap are barely enough to cover the cost of operations.
Can Milaap survive?
Without a prospect of lucrative returns, it might seem a futile exercise for investors to put money in other people’s endeavors. But perhaps, the appeal of the platform is detached from expectations of monetary gains. The company has set an ambitious target of meeting micro finance requirements of almost 500 Million Indians who do not have access to traditional banking mechanism. Do you think, they will be able to achieve this?
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