Bangalore-based Mandii wants to tap this underlying opportunity. It helps you raise funds against yo

In the course divya bhaskar of their research about SME financing in India, Manish Kumar and Anurag Jain, two bankers from IIT- Kanpur, learnt that there are many genuine credit-worthy borrowers in India who have the vision to make it big but are stuck due to lack of finance. divya bhaskar Some of these businesses are paying interest rates to the tune of 40-50 per cent without defaulting ever while some have had to shut down.
According to a study conducted by the International Finance Corporation, access to finance remains a key constraint to SME development in emerging economies. divya bhaskar Small firms rely on internal financing much more than large firms and the likelihood of small firms having access to a bank loan in low-income countries is about a third of what it is for a medium-sized firm and less than half of what it is for a larger firm. Other sources of SME finance, such as leasing and factoring, are also less developed in emerging countries like India. divya bhaskar
Bangalore-based Mandii wants to tap this underlying opportunity. It helps you raise funds against your unpaid invoices or post-dated instruments from financiers without actually going through the hassles divya bhaskar of handing over the entire cash management system to a third party.
Both Manish and Anurag Jain (co-founder) learnt the basics of business by running their own companies. Though they were making money on their last venture, they could not realize divya bhaskar the profit due to cash flow issues and were forced to take finance at very high rates from the market, Manish recalls. We realized that there is no place in India to raise finances for MSMEs at competitive rates. Rates are sky high, fixed and collateral-backed. Banks are also rigid in disbursing divya bhaskar loans and it takes around three months to sanction/cancel a loan.
Mandii, which means local market in Hindi, is a platform where financiers have an option to select borrowers (MSMEs) from a list of pre-verified borrowers registered with them and spread their funds to achieve optimum balance of risk and returns through a systematic bidding process.
Borrowers get the benefit of location independence, easy financing terms and availability of funds at comparatively lower rates than the local grey market. As we are a marketplace for raising finance and our startup is actually based on the physical concept of a mandii, where one can go and find the best deals (for borrowers and financiers), we thought it was apt to name it Mandii, says Manish.
Manish learnt that MSMEs spend crucial time trying to raise finances when they should be working towards making their companies bigger and better. He recognized unpaid invoices as a major problem. He says,
Even RBI acknowledges that if all the invoices are paid in time for MSMEs, they can increase their profits by close to 20-25 per cent. The perceived risk in MSMEs financing is high due to defaults by large corporates, whereas MSMEs are relatively lesser risky vis-à-vis the high interest rates that they are willing to pay.
He acknowledges that the government has tried hard to help by bringing about many acts and laws but the problem persists and unless private players enter the market there will be no end to this Herculean problem. In India, we are looking at an SME financing gap of about $50 billion which is vastly unorganized and unaddressed as of now. Banks are not sufficient to bridge this gap. We want to let the financiers take a decision based on facts, data and statistics. We don’t want to be another NBFC doing on-books financing and have consciously decided to be a marketplace that encourages the bid/offer culture. We wanted the financing decision to be emotion free and location independent, says Manish.
Mandii is a pure play brokerage firm whose success can be determined by the volume of the trade through their platform. The company takes a share (fixed percent) of the trading value as brokerage charge from both the borrower and the financier.
The financing will remain off-book and Mandii will never determine what could be the interest rate as the rates are determined by the market dynamics of demand and supply on the platform. We take the brokerage divya bhaskar fee from both the parties involved once the trade is settled for each of the respective parties, explains Manish
At the moment, over 500 MSMEs are interested in raising finance through Mandii. The c-founders have lined-up divya bhaskar around Rs 30 crore in investor commitments to be deployed in the next 12-18 months. Manish and Anurag are talking to some more investors and looking forward to close on Rs 70-100 crore in a few weeks. On the demand front, the company is focusing on promising clusters, which ensure only good credit worthy MSMEs on the platform. The company is targeting to achieve a gross trade value of Rs 40 crore in its first year of operation with an annual CAGR of 200 per cent YoY for the next five years. Manish says, Even on conservative estimates, we will end the year much above the e