Startup Deep Dive : Lendingkart — how a distress sale cut its valuation from $690M to $100M

In June 2024, investors marked Lendingkart at $690 million, the payoff for a decade spent teaching software to read a shopkeeper’s bank statement instead of asking her for collateral. Four months later, the company sold control to its own biggest investor at a price that valued it at $100 million — a cut of roughly 85%, and the number to hold onto as you read the rest of this piece.

Lendingkart did not disappear. It is still lending, still rebuilding, and still run out of Ahmedabad and Bengaluru as an RBI-registered non-bank lender to small businesses. But the story of how a fintech that once called itself India’s largest online lender to MSMEs ended up handing the keys to Temasek’s Fullerton Financial Holdings, at a fraction of its earlier price, says more about unsecured lending in India than any pitch deck does.

Quick facts

What they do

Lendingkart lends working capital to India’s small and medium businesses — the kind that need ₹2 lakh to buy inventory before a festival season or ₹15 lakh to cover a supplier’s advance, and that a branch-based bank would take months to assess. It does this two ways. The older way is direct: Lendingkart Finance Limited, its NBFC, underwrites and disburses unsecured business loans, typically for one to three years, priced anywhere from 13.5% to 35% a year depending on the borrower’s risk, plus a one-time processing fee of 1-2%. The newer way is indirect: through a platform called “2gthr”, Lendingkart sources, scores and services loans on behalf of banks and other NBFCs, who put up the capital and keep the resulting asset largely off Lendingkart’s own balance sheet. Both models sell the same thing — fast, collateral-light credit decisions built on a borrower’s bank statements and digital footprint rather than the property papers a traditional bank would demand.

The origin

Harshvardhan Lunia spent a decade in corporate banking — HDFC Bank, Standard Chartered, then ICICI Bank in London — before deciding, in his late twenties, that the work did not fit. He returned to India around 2010 and started a small advisory firm, Domestic Finance & Investment Private Limited, arranging alternative finance for cash-strapped small businesses. That advisory seat is where the founding insight came from: he watched the same MSME loan applications take three to four months to clear, with no visibility for the borrower on why, or whether the answer would even be yes. Traditional underwriting leaned on audited financials that most small businesses simply did not keep. Inspired by the wave of technology-led lenders emerging globally at the time, Lunia concluded that the bottleneck was not credit appetite but underwriting speed, and that a small business’s bank statements — twelve months of them — told a truer story of its health than a balance sheet ever could. He and co-founder Mukul Sachan built Lendingkart on that bet in 2014, borrowing roughly ₹1 crore between them from family to fund the first 49 loans before any institutional money came in. The company’s NBFC arm began life as an existing licensed shell, Aadri Infin Limited, which was taken over and renamed Lendingkart Finance Limited rather than built from a fresh licence.

The struggle years

Lendingkart’s public numbers show at least three distinct periods of stress, not one clean growth line.

The first came with the pandemic. In FY21, the company’s net loss widened by 32% to ₹28.4 crore, from ₹21.6 crore in FY20, as MSME borrowers under lockdown struggled to keep up repayments even with RBI-mandated moratoriums in place.

The second, and sharper, came a year later. In FY22, Lendingkart’s net loss jumped roughly seven-fold to ₹203 crore. The proximate cause was provisioning: write-offs and provisions more than doubled to ₹414.7 crore, nearly half of total expenditure of ₹889 crore, as the loan book scaled 24% faster than the company’s ability to price for the bad loans that unsecured MSME lending inevitably produces.

The third, and most consequential, unfolded through 2024. Lendingkart went more than four years without a fresh equity round, leaning on debt to fund growth instead. By mid-2024, the Economic Times reported the company was in a “cash crisis” and staring at a severe valuation cut, even as it scrambled to raise a small equity tranche alongside $12 million in debt from Stride Ventures in June 2024, at a reported $690 million valuation. That crunch culminated, four months later, in the distressed sale of control described below — and it was compounded through FY25 by a net loss of ₹288.3 crore, an assets-under-management contraction of roughly 19% (from ₹7,254 crore at the end of FY24 to about ₹5,842 crore nine months into FY25), and the exit of more than eight senior executives within a year, including Lunia himself.

The turning point

The clearest before-and-after in Lendingkart’s history sits in a four-month window in 2024. In June, the company was valued at $690 million on the back of a small debt-linked equity round. In October, Fullerton Financial Holdings — a wholly owned Temasek subsidiary that had backed Lendingkart since 2018 and already held about 38% of the company — agreed to infuse up to ₹252 crore (about $30 million) for a controlling stake, at a valuation of just $100 million. That is an approximately 85% reduction in four months, reported independently by both Entrackr and Business Standard. The Reserve Bank of India cleared the change of control around March 2025, formally handing Fullerton majority ownership of the NBFC that Lunia and Sachan had built. It was not a bankruptcy or a wind-down. It was a down-round acquisition by an existing investor, on terms that reflected how badly the unsecured MSME lending market — and Lendingkart’s own credit costs — had deteriorated.

The money behind it

Lendingkart raised over ₹1,050 crore in equity by October 2024, according to Entrackr’s compilation of regulatory filings, from a roster that included Fullerton Financial Holdings, Bertelsmann, Mayfield India, Saama Capital, Sistema Asia and India Quotient. Three backers shaped the company at different points. Bertelsmann and Mayfield India came in as early institutional investors and stayed through multiple rounds, giving the company runway through its scale-up years. Fullerton Financial Holdings entered later and more decisively: it led a round of over $87 million (about ₹565 crore) in 2018, built its stake to roughly 38% by 2024, and then used the 2024 cash crunch to take outright control — turning from a large minority backer into the parent company. That relationship deepened further in November 2025, when Lendingkart’s board approved a fresh Series F round of roughly ₹850 crore (about $100 million), with Fullerton contributing the largest single tranche of ₹511 crore and Bertelsmann, Mayfield and Saama each returning with smaller cheques alongside new participants Grand Anicut, Sistema Asia Fund and India Quotient. It was, per Entrackr’s reporting of the filings, the company’s first significant capital raise since Fullerton’s takeover completed.

How it makes money

The bulk of Lendingkart’s revenue has historically come from interest income on the loans it holds — over 92% of operating revenue in FY22, per its own filings, worth ₹570.6 crore that year — with the balance from processing fees, commissions and gains on loans it sells down to other lenders. The underwriting engine behind that book uses roughly twelve months of a borrower’s bank statement data, layered with other digital signals, to price risk faster than a traditional appraisal would; the company has said this data pipeline runs into billions of data points, though that is a company claim rather than an audited figure. The part people get wrong is assuming Lendingkart is primarily a balance-sheet lender at scale. Since launching “2gthr”, its co-lending platform, the company has pushed a rising share of its loan book off its own books and onto partner banks and NBFCs — company disclosures put the off-book share at roughly 70% of assets under management by FY24 — earning commission and platform fees for origination, underwriting and servicing instead of carrying the full credit risk itself. That shift lowers capital intensity, but FY25’s ₹288.3 crore loss is a reminder that the on-book portion Lendingkart does still carry remains exposed to real, sometimes severe, credit losses.

The numbers

The table below tracks Lendingkart Finance Limited, the licensed NBFC and the entity at the centre of the ownership story, in ₹ crore. (Its parent, Lendingkart Technologies Private Limited, reports separately on a consolidated basis and posted a profit of ₹174.92 crore on revenue of ₹1,090 crore in FY24 — a different, wider perimeter, per Entrackr’s filings-based reporting — which is why the NBFC’s own standalone numbers below are the ones this piece follows through.)

FY23’s figures vary slightly by filing basis — Business Standard’s standalone read put revenue near ₹803 crore and profit at ₹115.7 crore, while Inc42 and Entrackr’s consolidated read cited ₹798 crore and ₹118.8 crore respectively — small enough to be a rounding and consolidation difference rather than a contested fact. What is unambiguous is the shape: three years of climbing revenue and recovering profit through FY24, followed by a sharp reversal in FY25, when revenue fell 24.5% and the company swung to its largest loss on record as impairments on financial instruments more than doubled to ₹523.5 crore, or 41% of total expenses.

Where the money comes from

Lendingkart’s book splits two ways that matter. The first is on-book versus off-book: as co-lending has grown, roughly 70% of assets under management by FY24 sat on partner banks’ books rather than Lendingkart’s own, per company disclosures, a structural shift away from the balance-sheet-heavy model the company ran in its first decade. The second is ticket size: small-ticket unsecured loans, those under ₹10 lakh, made up about 56% of assets under management as of 30 September 2025, according to rating-agency commentary on the company, and Lendingkart has said it is deliberately rebalancing toward larger, better-secured tickets above ₹20 lakh to cut its exposure to the segment that produced the worst of its credit losses. The surprise, for a company still widely described as a small-ticket MSME lender, is how much of its current risk-management story is about shrinking that exact book. A related cushion: as of the same date, 56% of total assets under management and 60% of its own-book exposure carried cover under government credit-guarantee schemes (CGTMSE and CGFMU), which caps some of the downside on defaults even as the mix shifts.

The risks

Three risks sit close to the surface, and none of them are hypothetical — Lendingkart has already lived through versions of each. First, concentration in unsecured, small-ticket MSME credit: more than half of assets under management sit in loans under ₹10 lakh to borrowers with thin credit histories, a segment that is hardest to recover from once delinquencies set in and that breaks first when the broader economy slows. Second, regulatory and funding-cost risk: the Reserve Bank of India’s tightening of risk weights on unsecured credit exposures in November 2023 raised capital requirements and the cost of funds across the unsecured-lending industry, squeezing margins on precisely the model Lendingkart runs, and the sector-wide stress that followed shows up directly in Lendingkart’s FY25 impairment charge. Third, governance and execution risk through a leadership transition: control passing to Fullerton in 2024-25, the founder’s exit in June 2025, and the departure of more than eight senior executives within a year are the kind of disruption that can slow any turnaround, even one backed by a well-capitalised parent.

The takeaway

The transferable lesson from Lendingkart is not about technology or even about MSME lending specifically — it is about what a decade of scaling on debt-funded balance-sheet risk eventually asks of a lender. A model built to underwrite faster than anyone else still has to be right often enough, at scale, in bad years and not just good ones; when it isn’t, no amount of alternative data changes the arithmetic of provisions. Lendingkart’s answer, forced on it by a cash crunch rather than chosen ahead of time, was to shrink the balance-sheet-heavy business, lean harder on co-lending fee income, and hand control to a deep-pocketed strategic investor. Whether that produces a durable, smaller, steadier lender or simply delays the same reckoning is the open question its FY26 numbers will answer.

Frequently asked questions

Who founded Lendingkart and when?

Harshvardhan Lunia and Mukul Sachan founded Lendingkart in 2014 in Ahmedabad, disbursing their first loan in April that year, after Lunia’s earlier stint as a corporate banker and small-business finance advisor.

Is Lendingkart still independent?

No. Fullerton Financial Holdings, a wholly owned subsidiary of Singapore’s Temasek and an investor in Lendingkart since 2018, took majority control in a distressed deal announced in October 2024 and approved by the RBI around March 2025.

Why did Lendingkart’s valuation fall so sharply?

A multi-year drought in fresh equity funding, rising unsecured-lending credit costs sector-wide after the RBI tightened risk weights in late 2023, and a reported cash crunch in 2024 forced Lendingkart into a distressed sale of control to its own existing investor, at a valuation roughly 85% below the level set just four months earlier.

How does Lendingkart make money?

Mostly through interest income on unsecured business loans it holds directly, plus processing fees; a growing share now comes from commissions and platform fees earned by originating and underwriting loans that partner banks and NBFCs fund through its “2gthr” co-lending platform.

Did Lendingkart make a profit in FY25?

No. Lendingkart Finance Limited, the licensed NBFC, posted a net loss of ₹288.3 crore in FY25 (year ended March 2025), reversing a ₹60.1 crore profit the year before, as impairment charges on its loan book more than doubled.

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

• Entrackr, “Temasek’s Fullerton to take control of Lendingkart in distressed acquisition”, October 2024
• Business Standard, “Temasek’s Fullerton picks up controlling stake in Lendingkart for Rs 252 cr”, October 2024
• Entrepreneur India, “Fullerton Financial Holdings Acquires Controlling Stake in Lendingkart for INR 252 Cr”, October 2024
• Inc42, “Lendingkart Finance Slips Into Red, Posts INR 288 Cr Loss In FY25”, June 2025
• YourStory, “Lendingkart swings to Rs 288 Cr loss in FY25 as NPAs rise”, June 2025
• The420.in, “Lendingkart in Trouble: Top Executives Quit as Company Faces ₹288 Crore Loss in FY25”, 2025
• Entrackr, “Lendingkart posts Rs 1,090 Cr revenue in FY24, profit slips”, 2024
• Inc42, “Lendingkart FY24: Profit Declines 97% To INR 3.25 Cr”, 2024
• Business Standard, “Lendingkart Finance standalone net profit declines 97.47% in the March 2024 quarter”, June 2024
• Inc42, “Lendingkart Turns Profitable, Posts INR 118.8 Cr PAT In FY23”, December 2023
• Entrackr, “Lendingkart posts Rs 118 Cr profit after tax in FY23”, December 2023
• Entrackr, “Lendingkart’s losses mount 7X in FY22 while scale grows 24%”, October 2022
• Inc42, “Lendingkart Widens Losses By 32% To INR 28.4 Cr In FY21”, 2021
• Entrackr, “Exclusive: Lendingkart set to raise $100 Mn in Series F”, November 2025
• Fullerton Financial, “Lendingkart Technologies raising over US$87 million (INR 565 crores) in Equity Funding”, 2018
• Founder Thesis, “From London Banker to Lending ₹20,000 Cr: Harshvardhan Lunia’s Lendingkart Journey”, 2025
• Entrepreneur India, “Lendingkart First to Launch Co-Lending Scheme In Partnership With Banks Post RBI’s Revised Guidelines”
• ICRA and Infomerics rating rationales on Lendingkart Finance Limited, referencing AUM, portfolio mix and credit-guarantee coverage as of 30 September 2025 and 31 December 2024

Found an error? Write to us and we’ll correct it in the open, dated, on the piece.