Over 60 million micro enterprises in India are stuck in a rut because banks and organized finance companies do not find it feasible to fund them. This has resulted in a huge funding gap of over Rs 16 trillion(as estimated by IFC Report 2012) that remains unaddressed. Aye Finance was founded by Sanjay Sharma and Vikram Jetley with an aim to transform the micro enterprise financing in India by innovating on the methods that enable effective credit underwriting of this segment. By providing inclusive finance at affordable price to this ‘missing middle’,the company is solving this problem that was considered intractable.

Aye Finance P Ltd has innovated a unique cluster based methodology that utilizes the deep insights of the operations of a business cluster to make good lending decisions despite the absence of business accounts, credit histories or banking track records. It makes effective use of various data science tools psychometric profile tools, behavior based statistical credit scores and constantly improving cluster insights in arriving at the decision to lend to any given business customer.

Aye uses a unique “assisted fintech approach” to offer credit support to the historically excluded segment. It has chosen to set up 165 low cost branches in 18 Indian States to deliver a high touch origination experience to them.

The Journey

Having topped his 30 year banking career with the successful leadership of a Housing Finance Company that became a market leader in a span of 6 years, Sanjay wanted to devote himself to a socially relevant initiative. He came back to India in 2009 and worked with a major MFI for a while and helped them through the difficult year after the Andhra crisis. That is where he renewed his acquaintance with Vikram.

AYE has chosen to set up 165 low cost branches in 18 Indian States to deliver a high touch origination experience to its clients

Driven by a view that if India had to rise with a social balance, there was a need to catalyze the 60 million micro businesses at the bottom of the pyramid, Sanjay and Vikram decided to start their own financial company to focus on lending to micro enterprises. On April 2014, Aye gave its first business loan to a micro enterprise at its Karampura branch in West Delhi. Since then the company has multiplied its footprint to 165 branches across India and has disbursed over 1,40,000 business loans amounting to INR 2000 crores to Indian micro enterprises.

Aye drew interest from global investors SAIF Partners and ACCION in its first year of operation itself. Both the fund houses invested very early at the small seed round itself and brought with it the recognition of being associated with Private Equity Funds. Since then Aye has raised four rounds of investment and added accomplished investors to its suite of equity partners. Aye is the only finance company in India to be funded by CapitalG (erstwhile Google Capital) and they lead its Series C round and were part of its Series D round, which was led by Falcon Edge.

The Future Roadmap

Aye is honing its underwriting methods even further and is working on a machine learning algorithm that will allow it to improve the efficiency of its processes and also in extending credit to a larger micro enterprise population. “The fortunate thing is that the market is extremely large. It is estimated that this market is as large as 16 trillion in the market. What we are doing is going deeper and getting to a larger market share of the market penetration. We will continue on the same growth trajectory and in 5yrs time we plan to build our loan book to INR 5000cr” said Sanjay.