LenDenClub is solving a capital flow problem in the financial system of the country. The technology platform allows people with money to connect to people seeking money in a legal/regulated way. The problem is worth hundreds of billions of dollars and it will keep growing with the growth in the economy.
The problem started from the banking system, which generally, addresses a need of people looking for a bigger amount of loans. Their reach, in terms of giving loans, were limited to a certain class of people and urban/semi-urban areas. To break that issue, a new class of financial services providers, NBFC, came into a picture around two decades ago. However, they are also dependent on the banking system as far as their capital requirement is concerned. Thus, there is a need for an organisation which addresses the customer requirements, which were not addressed by banks and NBFCs by arranging a direct flow of capital from a person with money to a person without money.
Q.: Please tell us about the Product / Solution. How did you get your first customer? Explain how you went about the Product-Market Fit Process.
Ans: Our first customer was the husband of the maid of my friend’s office. When LenDenClub was launched, I will keep telling all of my friends about our loan products. He came to know about us and applied for a loan because his loan application was rejected by some private sector bank. He became our first customer. That time, it took around 29 days to bring enough lenders to fund his loans and then disburse it. Today we disburse one loan every second minute.
To achieve the right product-market fit, we followed a grounded approach wherein users’ data or user interactions give us a direction to provide them a product/service. Since inception, we did not require to change our target segment or our basic business model. This helped our technology and product team to maintain stability in the services we offer to users.
Q.: Please tell us about the founders
Ans: It’s an interesting story about how Dipesh and I started working together. When I was conceiving the idea of LenDenClub, I realised a fact that technology partner is a key role in the company.
As I came from a finance side of FinTech, I needed a cofounder who understands and built complex technology solutions. I started a hunt for the same on all social media platforms, whatsapp groups etc. I posted the same on my football group where I play football every weekend. Dipesh and I have been playing football together for some years before I knew that he was a techy and Co-founded a product before. He responded to my whatsapp post. We worked together on LenDenClub for around 6 months before we decided to be cofounders.
Currently, Dipesh takes care of product and technology. I take care of all business functions like growth, operations, finance, collections etc.
Q.: What is your USP about your business?
Ans: Positive unit economics and fast disbursements. These two factors have helped us scaling up business faster and firmly. Due to positive unit economics, we could leverage our marketing efforts in creating more visibility in the targeted user groups. Fast disbursement helped us in achieving 37% of repeat loans from existing borrowers and 70% of our lenders churning portfolio for at least 2.5 times.
Today, when we have scaled up our business 4 times in last 12 months, we still disburse 70%+ Loans on the same day to our customers. And we are very focused on this! There are a lot of process efforts and product change is required to maintain this kind of speed. However, our product team works on this insanely so that customers are happy and they come back to us.
Q.: What were your assumptions when you entered the market, learning that you have? Who in your mind is your ideal customer? What is your customer base as on today?
Ans: When we entered the market, we wanted to cater to the need of salaried individuals, who need money for their consumption and emergency situation. Till date, our target segment remains the same. However, we have more clarity on the sub segment of our TG. We have a much better idea about which salary range, age range, geography would get us better customers.
Today, we have more than 5 lakh registered users on the platform, out of which, around 2 lakh is our paid customers.
Q.: What has been your biggest failure as an entrepreneur and what did you learn from it??
Ans: Any failure is confined to a time period and not permanently. I can compare one such bad patch of time at LenDenClub. It was related to sudden churn in my team. At that point of time, we were a small team of 15 people. 4-5 people moving out of a 15 person team makes a huge difference to a startup. At that point of time, I felt that this should not have happened. However, later on I realised that some of the team members were bound to churn as not everyone can be part of a longer journey which startup is destined to be. Either they are not relevant in the further journey of the company or they don’t find role/company fitting into the career journey. It was better that they moved on as some of them would not have found a place in the company 12 months later.
So, the learning is that a lot of team members would not be able to scale them up beyond a certain level. As a founder, we have to help right people to scale up for the next role along with the company and have a conscious realisation about some people who cannot grow beyond a certain level. It’s better that they grow themselves in a different environment where they may be able to grow faster.
Q.: Please tell us about the investors (if any)
Ans: We have been funded by some known startup founders like Ashneer Grover (BharatPe), Ramakant Sharma (Livspace) and Artha Venture Fund.
Q.: Is there any interesting success story of your startup? If yes, please write about it. ?
Ans: Two stories, the first is that in the last 12 months, we have been running the business at the operational positive level for 6 months. It is not a conscious effort which we have been putting in. This is just a byproduct of our strong business base. In a current environment, when we have disbursed more than 60,000 Loans through the platform, disbursed more than a billion rupees worth loans, we feel that this is a rare success which we have achieved.
The second one is a happiness index of the team members. For the last 4 quarters, anonymous surveys have revealed that almost 90% of our team members are happy working with LenDenClub. We thrive to work hard towards making each and every team members’ life happy while they are adding value to the company.
Q.: Since inception, give us a sense of the value of business done by your venture? Please explain in detail.
Ans: Since inception, almost 2 million users have downloaded our mobile app or come to our website pages. Total registered users are more than 5 lakhs, out of which we have given 60,000 loans.
On a lender side, we have more than 30,000 registered with us. Each month, 7000-8000 lenders do active investment on LenDenClub platform.
Q.: What is the big picture of your startup? Is P2P lending sector leading to something bigger? If so, how?
Ans: We aim to be one of the top 25 financial institutions in the country by 2030. P2P lending or a similar model is required in India to bridge the credit gap left unaddressed by NBFCs and banks. We can simply take an amount of bank deposits remained idle with banks. They are neither deploying those funds in giving loans nor extending it to NBFCs for onward lending. If this money comes into the economy for consumption or income generation, it will fuel the growth. As the banks do not have capabilities to control small credits, p2p lending platform will emerge as an alternate to this.
Q.: Who do You Perceive as Your Competition? How do you differentiate yourself with them?
Ans: Under the industry competition we compete with the likes of Bajaj finserve, small finance banks etc. Some of them are very large institutions. However, we are creating our niche segment among all financial services player. As far as p2p lending sector competition is concerned, there are more 10+ players available in the market. They are the direct competition. However, the competition is not affecting much as players are not so big. We expect direct competition may start playing its role after 2-3 years.
Q.: What would be your goal to accomplish in the next 2-5 years? Any other information you would like to share?
Ans: Our goal is to create value for all of the stakeholders; be it customers, shareholders, service providers etc. I think in the next 2 years, we are dying to expand our loan operations pan India compared to 6 states right now. We also aim to grow our business by 5 fold from the current level.
Q.: What message do you want to convey to fellow entrepreneurs?
Ans: Entrepreneurship is a real life PUBG. At every stage there is a new battle with new factors. However, the journey is also equally challenging. At the end of the day you find that you created something new to add value to your customers. It gives a great joy of achievement. There is no permanent success or failure in the life. Keep trying, keep achieving, keep accomplishing.
Thanks Bhavin. All the best!