Finova Capital and ElasticRun: Navigating the Waters of Growth and Loss
October 29, 2024, 6:41 pm
In the ever-evolving landscape of Indian startups, two companies stand out: Finova Capital and ElasticRun. Each has carved a niche in its respective sector, but their journeys reveal the complexities of growth, funding, and market dynamics.
Finova Capital, a Jaipur-based non-banking financial company (NBFC), recently raised $135 million in a Series E funding round. This significant capital influx comes from a mix of new and returning investors, including Avataar Venture Partners and Norwest Venture Partners. The company aims to leverage this funding to expand its loan book, enhance technology, and broaden its geographic reach. With assets under management (AUM) totaling Rs 3,000 crore and a remarkable five-year compound annual growth rate (CAGR) of over 60%, Finova is on a growth trajectory.
Founded in 2015 by Mohit and Sunita Sahney, Finova focuses on micro, small, and medium enterprises (MSMEs). It provides essential financial services like working capital loans and machinery loans. The company has established a presence across 16 states, serving over 100,000 customers. Its technology-driven platform targets micro-entrepreneurs and semi-skilled professionals, offering them much-needed credit.
The latest funding round not only fuels Finova's growth but also provides an exit for early investors. This is a common theme in the startup ecosystem, where investors seek returns on their investments. The participation of new investors signifies confidence in Finova's business model and its commitment to financial inclusion.
In contrast, ElasticRun, a Pune-based B2B e-commerce platform, has been navigating its own set of challenges. Backed by heavyweights like Softbank and Goldman Sachs, ElasticRun has managed to cut its losses by nearly half in the financial year ending March 2024. The company reported a loss of Rs 350 crore, down from Rs 618.82 crore the previous year. This improvement is attributed to a strategic pivot towards high-margin regional brands, which now account for over 90% of its sales.
ElasticRun connects brands to Kirana stores in rural India, a vital link in the supply chain. The company has faced losses in previous years, but its recent focus on regional brands has paid off. By right-sizing its operations and enhancing its product portfolio, ElasticRun has significantly boosted its gross margins. The company’s private-label business has also seen strong growth, contributing nearly 20% to total sales.
Despite these positive changes, ElasticRun's gross merchandise value (GMV) has declined, a point that raises questions about its overall market performance. The company has not disclosed detailed financials for FY24, leaving investors and analysts eager for more transparency.
Both Finova and ElasticRun illustrate the dual nature of the startup ecosystem. On one hand, Finova's robust growth and successful funding round highlight the potential for financial services in India. The demand for MSME financing is immense, and Finova is well-positioned to capitalize on this need. Its proprietary underwriting and risk-assessment technology further enhance its competitive edge.
On the other hand, ElasticRun's journey underscores the challenges that startups face in a competitive market. The shift to high-margin products is a smart move, but it also reflects the necessity of adaptability in business. Startups must continuously reassess their strategies to remain viable. ElasticRun's experience serves as a reminder that even with substantial backing, profitability is not guaranteed.
The contrasting paths of these two companies also shed light on the broader trends in the Indian startup ecosystem. Investors are increasingly looking for companies that can demonstrate a clear path to profitability. The focus is shifting from growth at all costs to sustainable growth. This is evident in Finova's strategic use of funds and ElasticRun's pivot towards more profitable product lines.
As the Indian market continues to mature, startups must navigate a complex web of challenges and opportunities. Finova's success in securing funding reflects a growing confidence in the financial services sector, particularly in the MSME space. Meanwhile, ElasticRun's ability to reduce losses demonstrates the importance of strategic pivots and operational efficiency.
In conclusion, Finova Capital and ElasticRun represent two sides of the startup coin. One is riding the wave of growth, while the other is learning to swim against the current of losses. Both stories are essential chapters in the narrative of India's entrepreneurial landscape. As these companies continue to evolve, they will undoubtedly shape the future of their respective industries. The journey is far from over, and the lessons learned will resonate throughout the startup ecosystem.
Finova Capital, a Jaipur-based non-banking financial company (NBFC), recently raised $135 million in a Series E funding round. This significant capital influx comes from a mix of new and returning investors, including Avataar Venture Partners and Norwest Venture Partners. The company aims to leverage this funding to expand its loan book, enhance technology, and broaden its geographic reach. With assets under management (AUM) totaling Rs 3,000 crore and a remarkable five-year compound annual growth rate (CAGR) of over 60%, Finova is on a growth trajectory.
Founded in 2015 by Mohit and Sunita Sahney, Finova focuses on micro, small, and medium enterprises (MSMEs). It provides essential financial services like working capital loans and machinery loans. The company has established a presence across 16 states, serving over 100,000 customers. Its technology-driven platform targets micro-entrepreneurs and semi-skilled professionals, offering them much-needed credit.
The latest funding round not only fuels Finova's growth but also provides an exit for early investors. This is a common theme in the startup ecosystem, where investors seek returns on their investments. The participation of new investors signifies confidence in Finova's business model and its commitment to financial inclusion.
In contrast, ElasticRun, a Pune-based B2B e-commerce platform, has been navigating its own set of challenges. Backed by heavyweights like Softbank and Goldman Sachs, ElasticRun has managed to cut its losses by nearly half in the financial year ending March 2024. The company reported a loss of Rs 350 crore, down from Rs 618.82 crore the previous year. This improvement is attributed to a strategic pivot towards high-margin regional brands, which now account for over 90% of its sales.
ElasticRun connects brands to Kirana stores in rural India, a vital link in the supply chain. The company has faced losses in previous years, but its recent focus on regional brands has paid off. By right-sizing its operations and enhancing its product portfolio, ElasticRun has significantly boosted its gross margins. The company’s private-label business has also seen strong growth, contributing nearly 20% to total sales.
Despite these positive changes, ElasticRun's gross merchandise value (GMV) has declined, a point that raises questions about its overall market performance. The company has not disclosed detailed financials for FY24, leaving investors and analysts eager for more transparency.
Both Finova and ElasticRun illustrate the dual nature of the startup ecosystem. On one hand, Finova's robust growth and successful funding round highlight the potential for financial services in India. The demand for MSME financing is immense, and Finova is well-positioned to capitalize on this need. Its proprietary underwriting and risk-assessment technology further enhance its competitive edge.
On the other hand, ElasticRun's journey underscores the challenges that startups face in a competitive market. The shift to high-margin products is a smart move, but it also reflects the necessity of adaptability in business. Startups must continuously reassess their strategies to remain viable. ElasticRun's experience serves as a reminder that even with substantial backing, profitability is not guaranteed.
The contrasting paths of these two companies also shed light on the broader trends in the Indian startup ecosystem. Investors are increasingly looking for companies that can demonstrate a clear path to profitability. The focus is shifting from growth at all costs to sustainable growth. This is evident in Finova's strategic use of funds and ElasticRun's pivot towards more profitable product lines.
As the Indian market continues to mature, startups must navigate a complex web of challenges and opportunities. Finova's success in securing funding reflects a growing confidence in the financial services sector, particularly in the MSME space. Meanwhile, ElasticRun's ability to reduce losses demonstrates the importance of strategic pivots and operational efficiency.
In conclusion, Finova Capital and ElasticRun represent two sides of the startup coin. One is riding the wave of growth, while the other is learning to swim against the current of losses. Both stories are essential chapters in the narrative of India's entrepreneurial landscape. As these companies continue to evolve, they will undoubtedly shape the future of their respective industries. The journey is far from over, and the lessons learned will resonate throughout the startup ecosystem.