Vridhi Home Finance, a housing finance lender, has raised Rs 150 crore in its maiden round of funding from venture capital firm Elevation Capital.
With the fresh funding, the lending startup wants to scale up operations, raise credit lines from larger lenders and enter into new geographies.
It is rare for a tech-focused venture firm to fund a housing finance startup which is typically a brick-and-mortar business. Mridul Arora, partner at Elevation Capital, said he was convinced after looking at the market opportunity, spread in the business and the pedigree of the founders.
Bengaluru-based Vridhi was founded in 2022 by senior finance professionals Sunku Ram Naresh, the chief executive officer, Sunil Mehta, the chief finance officer and Sandeep Arora, the chief operating officer. Ram Naresh has worked with Bajaj Finserv and Aavas Financiers, while Mehta was with ICICI Bank and Yes Bank in the past. Arora worked at Kotak Mahindra Bank and Indiabulls Consumer Finance before starting Vridhi.
The startup recently received its home finance licence. It currently operates 20 branches with around 225 people across Karnataka and Andhra Pradesh.
“We got the licence very quickly and now we are looking to build a tech-enabled lending business with a strong physical presence, mostly catering to the affordable housing segment,” said Ram Naresh.
Vridhi wants to cater to the home loan requirements of consumers in small towns and district headquarters where the average ticket size of the loans will be around Rs 8 to 9 lakh. They only fund 50% of the value of the property and only offer loans to first-time home buyers.
“The total addressable market is around $300 billion in size and with rapid urbanisation, housing is a major asset to invest in and the market is highly underpenetrated,” said Arora.
Ram Naresh explained that he is looking to create a branch network of around 40 to 50 branches, invest in building a strong technology layer to power the business and create a team of around 400 to 500 employees who will acquire customers, underwrite them and help in documentation.
He believes that this business is not like a consumer lending business, which can be built purely digitally, but requires a strong physical presence. Technology will power backend systems, he added.
With advancement in account aggregators and Aadhaar, players like Vridhi are building a digital-assisted onboarding journey for customers.
“We are building systems that can help loan disbursals in every single tranche to happen within three to four hours,” Ram Naresh said.
Home loans are typically disbursed in tranches as the construction of building progresses. Typically, large banks take a few days to release each tranche. Vridhi intends to smoothen these processes through technology.
Industry insiders pointed out that with fintechs crowding the unsecured lending sector, many large investors are looking for opportunities in the secured space. Gold loan has already seen tech-enabled startups come up. Navi is trying to build a digital home loan business as well. With the likes of Elevation now backing players like Vridhi, the expanding home loan market could see major disruption.
