IIFL launches dedicated fund to invest in Indian fintech startups

Mumbai: IIFL Group, backed by Prem Watsa’s Fairfax Financial Holdings Ltd., has created a dedicated Rs 100-crore early-stage fund to invest in Indian fintech startups.

The financial services group, which has a large retail interface, is aiming to offer last-mile credit with the help of cost-effective technologies. IIFL Group will also provide mentoring, collaboration and partnerships to fintechs under the stewardship of its top management.

The IIFL fintech fund, sponsored by IIFL Finance and IIFL Securities, is already in advanced talks to invest in a few financial technology companies, including Leegality and FinBox, said two people familiar with the matter.


Early-stage funds are primarily provided for the initial stage of a company's development —from starting a business to gaining scale. In India, early-stage investors generally pump in money in tranches running in a few crores of rupees.

“To make this proposition of financial inclusion viable, you need to reach customers with the help of cost-effective technologies,” Nirmal Jain, founder and chairman of IIFL Group, said. “Fintechs play a big role here with their niche expertise. It makes sense to grow faster via such significant investments and collaborations instead of setting up our own bases and incurring fixed costs to pursue the potential of financial inclusion.”

“Fintechs pave the way for faster credit delivery,” he said, confirming the development.

IIFL Finance, which counts among the top non-banking finance companies in India, has a retail customer base of 6 million across the country. They are mostly based out of “underserved and unbanked” territories, a key focus area for financial inclusion.

Short-term business or agri loans, affordable home loans, and credit to micro finance units are among other credit products that IIFL looks to offer through such acquisitions.

Similarly, IIFL Securities, a retail-focused stockbroking firm with 2.3 million customers, has embarked on a digital transformation path. With share market soaring, brokers can offer different capital market products across the country.

“Be it any fund investment or debt securities, fintech can serve it better when it comes to smaller towns and cities,” said Jain.

First Investments
Through the initial round of investing, IIFL companies will likely acquire a significant stake in FinBox and Leegality.

• FinBox is the only fintech platform that simplifies a bespoke lending model by handling all compliance integrations and risk management.
• Leegality is an e-signing and document workflow platform, which helps businesses to digitise and automate documentation processes.

IIFL has earlier invested in Trendlyne, one of the most popular market data platforms, which was a part of #IIFLDisrupt before it created the fund. Similar investments are now expected under the fund’s mandate.