NBFC Prayaan Capital Raises ₹110 Crore to Deepen its Footprints in MSME Lending Market

Prayaan Capital, a Chennai based non‑bank financial company, announced a Series A funding round of ₹110 Cr (approximately $12.1 Mn) led by Peak XV Partners. The capital will be deployed to build a technology‑driven lending platform, increase presence in the Indian MSME market and support hiring. 

Series A Funding Details and Use of Funds 

The ₹110 Cr injection follows a seed round of $1.2 Mn in 2020 that was led by Accion Venture Lab. Prayaan Capital plans to allocate the new funds towards platform development, scaling its loan portfolio for manufacturing, trading and services MSMEs, and strengthening its team.  

The company also aims to enhance its long‑term secured loan offerings backed by commercial and residential property mortgages. 

Leadership Changes and Ownership 

Rangarajan Krishnan, former MD and CEO of Five Star Business Finance, has acquired a controlling stake in Prayaan Capital and now serves as Managing Director. His experience in the NBFC sector is expected to guide the firm’s growth strategy. 

Read More: Xflow Raises $16.6 Million in Series A Led by General Catalyst at $85 Million Valuation! 

Market Context for MSME Credit 

Despite increased digitisation, Indian MSMEs face a significant credit gap. A recent NITI Aayog report indicated that only 19% of MSME credit demand was met formally by FY21, leaving an estimated ₹80,00,000 Crore unmet. New‑age NBFCs such as Indifi Capital and Techfino are leveraging technology to address this gap, attracting investor interest. 

Investor Activity in the Sector 

Peak XV Partners announced the closure of commitments totalling $1.3 Bn across its India Seed, India Venture and APAC funds. The firm’s portfolio includes Five Star Business Finance, highlighting its focus on financial services and MSME lending. 

Conclusion 

Prayaan Capital’s ₹110 Cr Series A funding underscores continued investor confidence in technology enabled MSME financing. The capital will support platform development, market expansion and talent acquisition, positioning the NBFC to address the persistent credit shortfall faced by Indian small and medium enterprises. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.