This startup which lends to the rural middle class raises $35 million in a Series C round

• The latest series of funds raised by SarvaGram Solutions saw investments from Elevar Equity, Elevation Capital, Temasek and TVS Capital Funds.
  
  
• SarvaGram says that it provides a range of customised financial and capacity-enhancing products to an increasingly aspirational rural India.
  
  
• The startup is headquartered in Mumbai, and currently operates out of eight hubs, over 50 outlets across four states.
  

Digital lending platform SarvaGram Solutions, which focuses on lending to rural households raised $35 million in a Series C round, the startup said on Tuesday.

Investors in this round include Elevar Equity, Elevation Capital, Temasek and TVS Capital Funds, with Elevar Equity being the largest investor in the company. SarvaGram closed its Series B round at $10 million in February 2021.

“We found the strong experience of the founders, the focus of SarvaGram on the underserved rural middle class households and the increasing availability of data which makes for better underwriting, a differentiated story,” said Anuradha Ramachandran, managing partner, TVS Capital Funds.

SarvaGram says that it provides a range of customised financial and capacity-enhancing products to an increasingly aspirational rural India. As per its own estimates, the target market is over 80 million households.

“SarvaGram is at the cusp of two critical trends. First, the inflection point in rural markets as demonstrated by growing economic activity and aspirations seen across rural households and second, leveraging the entry point of financial services for a truly data led broader distribution strategy. This round provides aligned growth capital to help the company execute to their scale ambitions,” said Jyotsna Krishnan, managing partner, Elevar Equity.

The startup is headquartered in Mumbai, and currently operates out of eight hubs, over 50 outlets across four states. It has over 250 franchise partners covering over 8,000 villages.

With this funding round, SarvaGram plans to expand its distribution network by adding 75 more outlets by the end of FY24. It also plans to expand its on-ground franchisees — known as ‘SarvaMitra’ - to three times the current strength across different states.

SarvaGram claims to take a 360-degree view of rural households as cohesive economic units. It applies data-driven intelligence to assess their overall potential including an in-depth understanding of their ground reality, balance sheets and multiple income streams.

“Having successfully executed our household-centric hypothesis across tens of thousands of rural households, we now understand our customers much better. The fundraise will boost our mission of putting more power in the hands of rural households by enhancing our technology platform, strengthening the data analytics layer apart from growing our distribution and adding on-ground human capacity,” said Utpal Isser, co-founder, MD and CEO, SarvaGram.

Its solutions include a high degree of de-risking as well as customization to serve the needs of the households as opposed to being restricted to a product selling paradigm. It also says that its high-touch, high-tech distribution platform leverages technology and data science along with a highly nimble on-ground presence.

“Their lending offering is unique and creates the foundation to offer a range of solutions - unlike the urban salaried individual with a payslip, assessing income for a rural borrower is tricky - given multiple income streams, variability in agricultural earnings, and limited paper trails,” said Mridul Arora, partner, Elevation Capital.

In most rural households, documentation is non-standardized. Consequently, the 150 million household-strong rural market is underserved by banks and large NBFCs, and SarvaGram wants to address it. “We are impressed by the team’s strong execution in a tough environment, scaling to ₹275 crore assets under management, while maintaining tight credit quality and approaching profitability,” said Mridul Arora, partner, Elevation Capital.


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