NeoGrowth has raised Rs 85 crore in fresh funding, split between equity and debt. The money comes from Dutch development finance institution FMO and existing investor LeapFrog Investments. It hands the Mumbai-based digital lender more room to grow.
The company will use the proceeds to grow its loan book. It aims to reach nearly Rs 3,000 crore before it needs another equity infusion. NeoGrowth had earlier raised Rs 300 crore, or $36 million, in a Series D round in December 2022 led by FMO.
Lending built on data, not collateral
Co-founded in 2011 by Dhruv Khaitan and Piyush Khaitan, NeoGrowth lends to small businesses. Its products include collateral-free and collateral-based loans for micro, small and medium enterprises. The tickets are small, and so are the borrowers.
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The company assesses customers using digital payment data, point-of-sale transactions and cash flows. It does not rely only on traditional collateral. Repayment can be daily, weekly, fortnightly or monthly, a structure built to match the cash rhythm of a small shop.
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NeoGrowth claims to operate in more than 25 cities. It says it serves over 80 business segments and has funded more than one lakh businesses across the country.
Most of those customers are businesses that banks find hard to underwrite. A kirana owner may have steady daily sales but no property to pledge. NeoGrowth prices that risk using transaction history instead of collateral.
Why MSME lending is drawing money
Digital lenders are increasingly using GST records, banking transactions and payment trails to judge creditworthiness. That has opened up kirana stores, manufacturers, traders, distributors and small service providers as borrowers. Many of them were shut out of formal credit before.
Investors have noticed the shift. Prayaan Capital raised Rs 110 crore in a Series A round led by Peak XV Partners in February 2026. GetVantage secured Rs 63 crore in August 2026, while Business Nextgen Finance raised Rs 215 crore.
FlexiLoans and Techfino also added capital, raising Rs 375 crore and Rs 65 crore respectively. The funding taps have stayed open for lenders that can show clean books.
The test ahead
Competition among MSME lenders is intense. The sector will be judged on asset quality rather than loan-book size. NeoGrowth’s plan to reach Rs 3,000 crore puts it squarely in that race, and the FMO backing suggests its lenders are ready to fund the long run.