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Meet the alum behind India's largest online lender

How Sashank Rishyasringa overcame doubt, skepticism, and a daunting move to help thousands of family-owned businesses thrive.
Sashank Rishyasringa
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Sashank Rishyasringa (NJE, NYO 05-10) is Co-founder and Managing Director of Capital Float, a technology-led, digital finance company that underwrites unsecured loans to small businesses and consumers in India. 

An Indian national, Sashank lived in the U.S. for more than a decade, spending four years at the Firm between attending Princeton and Stanford Business School. In 2013, he moved back to India with the intention of “building something of value and impact, that would solve a large problem.”

He hit upon a lending platform for small businesses, unlocking financing opportunities for millions of Indians – essentially a digital ‘Grameen Bank’ for small business.

Now, Capital Float is India’s largest online lending platform, adding 20,000 new customers each month.

We spoke with him recently about how the company operates, the challenges he faced in building it, and the impact that he’s seen first-hand.

How does Capital Float work?

There's a large, credit-starved segment of worthy customers in India who are not well served by the banking system, and these customers are increasingly technologically savvy. We use a combination of technology and strategic partnerships to reach these customers. For example, we have a partnership with Amazon to fund businesses that are already selling on that platform. We also work with many of the large e-commerce companies in India to fund merchants who are buying and selling on their marketplaces.

Similarly, we have partnerships with big players in the payment space. Pine Labs is one of the largest. We work with them to lend to businesses that are typically using these point-of-sale systems to accept payments from their customers. We're tapping into large online commerce marketplaces that are already aggregating at scale and are generating transaction data – both purchase and sales history – that can be used to underwrite.

We've created products that work almost like a credit card, where somebody can take a loan for as little as 30 days or as long as three years. It's designed to match businesses’ working capital cycle and their needs. 

One of the products we've developed is something called Pay Later, which allows an SME to pay their suppliers on credit. The problem in India is that many manufacturers are large companies, but most of the distributors and retailers are very small companies, and therefore do not get good credit terms from large banks. Our product allows them to purchase inventory and raw materials on credit, much like a large company would do in partnership with a bank.
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Why SME lending? What drew you to that business?

Most startup stories start with an idea, and then a team, and the business gets built from there. This was a situation that began with the team – me and a fellow classmate from Stanford – and a set of design principles. We went through a process of exploration of looking at several different opportunities in India, and the consistent thing that we saw was a ton of entrepreneurship, but with many young entrepreneurs facing a challenge in accessing financing.

Not only were they not able to access equity capital, they were not able to access debt capital from traditional banking sectors. This was sort of an “a-ha” moment for me. So rather than focusing on what business we wanted to create, the question became how we could help millions of other businesses grow.

What were Capital Float’s early days like?

When we started to sharpen our focus, a couple of themes emerged. The first was that this was a highly underpenetrated demand pool. At the time, SME lending in India by banks was around a $150 billion industry, but by various estimates, the unmet credit demand coming from SMEs was about $400 billion. This gap was being met through friends and family funding or informal lending sources – or it was just going entirely unmet.

The second was that India was in the stream of making a transition from a data-poor to a data-rich economy. All the key enablers for digital- and data-driven financial services were starting to be put in place. Smartphone use was really taking off, and wireless, mobile internet access was reaching an inflection point. The biometric-based Aadhaar unique ID system had also crossed one billion citizens. All the building blocks from an infrastructure perspective were starting to appear for a digital lending model.

Click here to see a video of Sashank discussing Capital Float. 

Did you ever doubt your decision to pursue online lending?

When we began this journey, we met with a lot of skepticism, at least in India. Most venture capital firms and private equity firms felt that lending in India was a very off-line, brick-and-mortar business, and that a tech approach wouldn’t work. 

There were times when we doubted ourselves and wondered if we were too early, or barking up the wrong tree. There was a temptation to move toward the middle ground and try and serve a more upmarket segment of customers, where it was clear that they were already tech savvy, there was already data, there was already some kind of track record of people lending to them. 

That was a tough period, honestly, just to figure out if we were right in going against the grain, or if we were a little delusional. But we stuck with it, and it turned out to be a good call. Because five years later, online lending is a proven model in India, and we're the market leader in this segment – and the largest digital lender in the country.

What are some examples of the impact Capital Float has had in providing loans to small businesses?

We’ve had a lot of impact in the past year with small ‘kirana’ stores – mom-and-pop shops that sell household goods, groceries, pastries, etc. They're basically micro merchants who haven't ever been addressed by the banking system. Almost 95% of these merchants have a smartphone, so we’ve created an app they can download. They provide a few key data points, and then they get a loan offer on the spot. They can digitally sign it and immediately receive the funds in their bank account. 
Capital float process chart
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One of our early customers was an owner of one of these kirana stores. He was amazed that he had gotten a loan in less than five minutes. When we visited him a year later, he had brought a couple of his siblings from his village, and helped them set up business with him as well. In this case, the whole family reaped the benefits, and this person went from having a one-person shop to running three corner shops in that area, and employing almost ten people.  

Another good example is when we suddenly got an application online from a business that was selling mobile phones in a city that many of us had never heard of. It was kind of amazing that he even found us. He began with a $10,000 loan, and in three years, he scaled to a point where his line of credit was almost $100,000. He no longer had to sell mobile phones only in a small town – he was able to sell them across the country, through e-commerce. He was such a savvy businessman that he used this credit line to successfully manage his working capital and inventory requirements to scale up.

How big of a decision was it for you to move back to India from the U.S., after being based here for more than ten years?

It was quite a big decision. When I was entering my second year at Stanford, where I was doing my MBA, I had approached it with the perspective of wanting to spend time in Silicon Valley, and then eventually moving back to India to engage with the entrepreneurship scene there, to build something of value and impact. But I felt like the opportunity to create a fundamental building block of the new tech-driven economy was very much up for grabs for anyone who was willing to roll up their sleeves and understand the nuances of the Indian ecosystem. 

It was a bit daunting, both from a lifestyle perspective as well as reorienting to India, but it was something that I found a very exciting challenge. I'd always kept abreast of what was happening in India, and always had a desire to eventually move back and participate in the amazing growth story that we're living through right now in this country.

What do you see as your biggest business challenge?

Our big challenge is figuring out how to continue to grow while at the same time managing risk and maintaining portfolio quality. We're growing so quickly that we have to be able to make sure that we're always also being thoughtful about credit quality, and about allowing our credit models to mature and start to have a bit of a track record before we rapidly expand in newer segments.
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Who was your most influential mentor at McKinsey, and what did you learn from them?

One of my most influential mentors at the Firm was Jed Finn [NYO 05-11]. He was my first EM, and then the Partner on my first study as an EM. He remains the person who had the most impact on my development both at the Firm and beyond. 

The best thing I learned from him was an ability to look through the clutter, and very clearly identify what the best outcome looks like – and then to be able to move toward that with lightning speed, while also motivating and managing a team. He exemplified to me a distinctiveness in both strategic thinking and in execution. That's shaped the way I approach things in many ways, both in my past life as a consultant, and now as an entrepreneur.

Describe the way you work in one word.

Experimental. Everything we're doing is figuring things out from scratch. That means I have to be very willing to let go of ideas that may not have worked, but also be able to figure out what is most likely to stick, whether it's in terms of org design, or even in terms of business or product strategy.

What do you like to do when you’re not working?

I really enjoy music. I play Indian classical music on the violin. I love jazz. I try and listen to as much live music as I can in Bangalore, which is a great city for that. I also enjoy travel, and specifically I really enjoy being by the water – scuba diving, sailing, swimming. Also, I read a lot of history, particularly ancient and medieval history.

Where do you see Capital Float in five years?

In five years I envision that we’ll have well over a $1 billion portfolio. We'd like to become a one-stop shop financing partner for small businesses and consumers across the country – the “banker” to Digital India. We'd like to be able to meet the entire gamut of their financial needs right from the smartphone in their pocket. Moreover, we'd like to have defined a new benchmark for lending in India, in terms of speed and ease to the customer.

When you look back at the end of your career, what do you want to see?

Impact. The most important thing that drives me is the ability to have meaningful impact at scale. I want to have created products, experiences, services, or policies that have been game-changing, or that meaningfully improved a large number of people's lives.

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