Rural-focused lending fintech Navadhan has secured $5 million (Rs 40 crore) in its pre-series A funding round. The funding round was led by Prime Venture Partners, with participation from existing investors Gemba Capital and Varanium NexGen Fintech Fund. Navadhan, founded in 2019 by senior financial services and banking executives, has raised a total of $2.8 million over two seed rounds. The Mumbai-based company runs a technology platform called AceN, which offers end-to-end services from sourcing to digital onboarding of customers, as well as underwriting, payments, and collections. The newly raised funds will be used to strengthen the AceN platform and scale up the company’s distribution business.

Navadhan is a registered non-banking finance company that targets customers who are underserved by traditional banks. The company uses an underwriting model that assesses the financial situation of customers based on their digital footprint and other cash flow indicators. It also has a physical presence on the ground for customer service. Navadhan currently has over Rs 300 crore of credit lines available from 20 banks and non-banking financial companies. The funding will help the company bring more small businesses into the formal economy and further expand its reach.

Sanjay Swamy, Managing Partner at Prime Venture Partners, praised Navadhan’s tech-driven model for distribution, underwriting, and robust collections. He believes that Navadhan’s co-lending approach will enable the company to achieve meaningful scale.