Tiger Global-backed Progcap expands beyond lending, pilots tech platform for MSMEs
It is building a full-stack software-as-a-service (SaaS) platform for brands, distributors and retailers, expanding from pure-play lending into embedded finance as a second revenue source, co-founders Pallavi Shrivastava and Himanshu Chandra told Mint.
'Large corporates have access to platforms like Salesforce but the actual sales process on the ground was still very analog. If you can place the order on the spot and initiate the payment process immediately, it leads to better conversion. Smaller brands and distributors lacked access to such tech," said Chandra.
Progcap's new vertical will digitise this supply chain end-to-end and is already live with over 40 companies. Progcap plans to scale up embedded credit on this platform. Embedded credit means getting a loan right where you're buying or selling something, without going to a bank.
'We want to be the operating system for these brand-distributor-retailer ecosystems," said Shrivastava.
This comes as Indian businesses such as Zepto's Atom, Big Basket's BB Matrix and InsuranceDekho's Heph launch their SaaS verticals to diversify revenue streams.
Currently, Progcap's SaaS vertical offers credit only through Progfin, its non-banking finance company. The company aims to onboard over 200 brands and will open the SaaS platform to other banks and financial institutions by year-end, the founders said.
Revenue contribution from the SaaS and embedded credit vertical is expected to be 10-15% over the next two to three years as lending will continue to be the main business.
'It is significantly reducing our customer acquisition cost. If the transaction is initiated on our platform, there's a high likelihood that we'll also be chosen to finance it," said Chandra.
He added that it is helping reduce feet-on-the-street sales teams.
'Sales teams of our partner brands essentially became our onboarding channels, and we didn't need to send field teams," said Chandra.
Automating processes
This comes as companies actively think of further automating their processes and reducing costs to become leaner and turn profitable.
Progcap's revenue from operations almost doubled to ₹139 crore in FY24 from ₹71 crore in FY23, while it managed to narrow its loss to ₹46 crore from ₹49 crore. The company is yet to file its FY25 financials.
Founded in 2017 by Srivastava and Chandra, the financial service company, last valued at over $600 million, gets 95% of its revenue from lending to micro and small businesses. Within the SaaS platform, direct monetisation will come from subscription-based fees charged to brands and distributors.
In addition, the new vertical opens up international expansion possibilities for Progcap.
'Lending is heavily regulated and requires deep market understanding. SaaS, however, is globally scalable," said Chandra. 'Some large brands are already asking us if we can deploy this in Bangladesh or Indonesia. So, once we prove the product in India, we will consider expanding it internationally."
Though still at an early revenue stage, the SaaS platform is expected to be spun off as a separate entity company in two to three years as Progcomm, said Shrivastava. Co-founder Chandra leads this vertical fulltime, she added.
Funding in the works
Progcap is also preparing to raise a fresh round of equity capital to fund growth. The new round will include a secondary component to provide partial exits to early investors, the founders said.
'We haven't hit the market yet," said Shrivastava. 'But we're looking at capital to expand geographically, grow the team, scale the lending book, and double down on SaaS plus embedded credit. A portion may go into secured lending pilots as well."
The company has been diversifying revenue outside of unsecured lending, an area that's come under greater scrutiny of the banking regulator.
So far, Progcap has raised about $110 million across four funding rounds from marquee investors such as Tiger Global, Sequoia Capital India and Google.
'The valuation will depend on timing and market conditions. We're not chasing vanity milestones," Shrivastava said.
Progcap aims to grow its assets under management to ₹3,000 crore by the end of FY26, riding on strong demand for formalised credit in India's underserved micro, small and medium enterprise sector.
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