Faircent founder Rajat Gandhi got the idea that peer-to-peer lending would work, thanks to observing a colleague buy a bullet by borrowing credit from a bunch of friends. Today, Faircent processes over Rs. 1 crore worth of loans per month, all through peer-to-peer lending.
An idea can be ignited even from a small spark. The story of the inception of Gurgaon-based Faircent is also one such. In 2011, Faircent founder and CEO Rajat Gandhi’s then colleague used to borrow small loans from multiple friends to fulfil his needs at a specific point of time. “He once wanted to buy a Bullet and posted a request on Facebook asking his friends and family to part fund the purchase. In a week, he was riding his Bullet to office,” Gandhi recollects. This incident, coupled with his understanding of the opportunities in the consumer Internet space (he had worked at Times Internet on TimesJobs.com, SimplyMarry.com and MagicBricks.com), gave him the confidence to start Faircent, a peer-to-peer lending platform.
Currently, we have 30,000 registered borrowers and we are adding 3,000 registered borrowers every month
Incorporated in 2013, Faircent built and launched its platform in 2014. It received funding from Singapore-based M&S Partners and Bangalore-based Aarin Capital Partners in 2016. Active angel investor and Manipal Global Education’s TV Mohandas Pai has also invested in the venture through 3One4 Capital and joined the advisory board. In addition, Faircent received US$ 1.5 million funding from Brand Capital, the ad-for-equity investment arm of Bennett Coleman and Co (BCCL). “Recently, we diluted 9.84 per cent of our stake to JM Financial Products, a subsidiary of JM Financial Ltd,” he adds. Individual investors such as Arun Tadanki (former managing director Yahoo Asia), Doreswamy Nandkishore (ex-member of the global board of Nestle) and Kshitij Jain (US-based serial entrepreneur and founder of Mobolt) have also invested in the company.
Peer-to-Peer Lending: How It Works
Faircent has built the underlying technology to provide credit on demand at a reduced cost quickly. The tech-enabled algorithms rejects over 90 per cent of the borrowers who apply for loans. Each borrower registered on Faircent is evaluated based on his ability, stability and intention to repay based on an analysis of over 120 parameters and 400 data points. Lenders are encouraged to spread their risks by building portfolio across borrowers of different risk buckets.
The Faircent P2P lending marketplace transparently showcases the performance data of all its borrowers including loan amount, interest rate, timely/delayed payments etc. This empowers investors (peers who lend to them) to take informed decisions.
It also offers android and iOS app for its lenders to trade on the platform in real time, and is in the process of launching facilities such as ‘Robo-lending’ and ‘Pool-in-online-wallet’, to automate part of the process and cut costs.
“With demonetization, fintech companies have suddenly been thrust in to the limelight,” Gandhi opines. According to a report by P2PFA, the cumulative lending through P2P platforms globally at the end of Q4 of 2015 has reached 4.4 billion GBP. Lending through P2P has grown dramatically from 2.2 million GBP in 2012 to 4.4 billion GBP in 2015. “Similar potential lies within the Indian market which can attain a size of US $ 4 billion to US $5 billion in the next 5-6 years. The potential is immense,” believes the entrepreneur.
The Faircent platform has over 6,000 registered lenders and the average ticket size of loans is Rs 2 lacs. “We have 30,000 registered borrowers and we are adding 3,000 registered borrowers every month,” he adds.
Faircent is witnessing, on an average, Rs. 1 crore worth of loan transactions every month and has disbursed loans amounting to more than Rs. 10 crore in the last two years.“We aim to reach Rs. 400 crores in loans disbursed in the next two-three years,” he projected.
Launched operations in: 2014
Focus: Peer-to-peer credit borrowing
Funded by: M&S Partners, Aarin Capital Partners, 3One4 Capital, Brand Capital, JM Financial Products, individual investors