MSME digital lender NeoGrowth has raised ₹85 crore in a mix of equity and debt from Dutch development finance institution FMO and existing investor LeapFrog Investments, CEO Arun Nayyar confirmed to The Economic Times.
Roughly 70% of the raise is equity, with the rest coming in as debt. NeoGrowth lends to small offline businesses — retailers, restaurants and cafes — a segment that remains underserved by mainstream banks despite steady formalisation of credit.
The fresh capital gives the lender headroom to grow its loan book to nearly ₹3,000 crore before it needs another equity infusion. Nayyar told ET that a larger round of around ₹500 crore is being planned for next year, signalling an aggressive growth push after a challenging credit environment for small-business lending last year.
FMO's participation brings a development-finance seal of approval that few Indian MSME lenders attract at this stage. With a strengthened balance sheet, NeoGrowth is positioning itself to underwrite more kirana-scale borrowers — the very segment India's credit-inclusion story keeps circling back to.
Why it matters for founders
MSME lending is heating up again after last year's credit wobble — fresh equity from a DFI like FMO shows patient, long-horizon capital is back on the table for the right lending models.