Information on the Target

Propelld is a fintech company founded by three friends from IIT Madras, focusing on providing educational financing to individuals who cannot afford it. Despite their limited financial experience, Bibhu, Victor, and Brijesh launched the company with a strong vision and determination to support vulnerable populations during difficult times, such as the COVID-19 pandemic.

As the economic landscape changed with the onset of the pandemic in India, Propelld faced significant challenges. However, rather than retreating, the founders displayed remarkable resilience and a commitment to growth, managing to maintain low default rates and expanding their lending significantly amidst adversity.

Industry Overview in India

The Indian fintech industry has seen rapid growth in recent years, capitalizing on technological advancements and a large population in need of financial services. The sector includes various segments such as payment processing, personal loans, and educational financing. With an ever-increasing demand for accessible education among India's youth, companies like Propelld are carving out essential niches to address these needs.

COVID-19 heavily impacted the economic environment, with many individuals losing jobs and businesses struggling to stay afloat. During the lockdown, the Reserve Bank of India (RBI) implemented a moratorium on loan repayments, providing temporary relief for borrowers but posing a significant risk to lenders. Major companies like Bajaj Finance experienced substantial first-default rates amidst this turmoil.

The educational financing niche within fintech is particularly crucial, as the pandemic disadvantaged many young students reliant on financial aid for their education. Traditional lenders became risk-averse, creating a unique opportunity for agile fintech companies to step in and provide support. Propelld seized this moment, displaying their ability to thrive in challenging conditions.

Despite a competitive and precarious market, Propelld’s strategic decisions and strong underwriting capabilities allowed them to gain traction among borrowers, effectively countering trends illustrated by larger institutions' failures.

The Rationale Behind the Deal

The decision to invest in Propelld was driven by the company’s ability to adapt and seize opportunities during a period of distress. The founders’ approach to risk management and their firm belief in the importance of continued lending for growth highlighted their entrepreneurial spirit. In spite of the prevailing fear among other lenders, Propelld's focus on resilient underwriting attracted further investments.

Following a remarkable trajectory of growth, Propelld's impressive performance, with a default rate of only 3%, underscores their strong operational capabilities. This performance—especially during an economic downturn—offered confidence to investors, resulting in Westbridge Capital leading a significant $35 million Series B financing round.

Information about the Investor

Westbridge Capital is a well-respected investment firm known for its focus on growth-stage investments in India. The firm has a track record of successfully backing various high-potential companies across diverse sectors, leveraging its extensive industry expertise to foster sustainable growth and long-term value creation.

The investment in Propelld aligns with Westbridge’s strategy of backing resilient businesses with a strong market presence and innovative solutions. By choosing to invest in Propelld, Westbridge Capital signals its confidence in the fintech sector and the company's extraordinary growth potential.

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From an expert perspective, Propelld's venture into the education financing sector during a crisis showcases remarkable foresight and strategic agility, marking it as a potentially excellent investment. The company has demonstrated exceptional capabilities in managing risk and maintaining low default rates compared to industry giants, which reinforces the belief that they are well-positioned for continued growth.

Furthermore, Propelld’s execution in penetrating underserved markets indicates a robust business model capable of adapting to evolving consumer needs. Their successful expansion into supplementary education financing and exam coaching products illustrates their innovative approach and market responsiveness.

Given the evolving landscape of fintech and the ongoing demand for educational financing in India, Propelld stands at the forefront of a sector poised for growth. Their ability to navigate challenges and capture market share during distressing times is commendable and suggests a promising future.

Overall, with strong leadership, innovative risk management, and an optimistic growth trajectory, Propelld is an investment with the potential to deliver significant returns while positively impacting millions of students across India.

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