NeoGrowth Raises Rs 85 Cr from FMO and LeapFrog to Expand MSME Lending

NeoGrowth, a Mumbai-based digital lender focused on micro, small and medium enterprises (MSMEs), has raised Rs 85 crore through a combination of equity and debt from Dutch development finance institution FMO and existing investor LeapFrog Investments.

The latest funding will help the company expand its loan book to nearly Rs 3,000 crore before it requires another equity infusion, according to the company.

Founded in 2011 by Dhruv Khaitan and Piyush Khaitan, NeoGrowth provides business loans designed around the financial needs of small businesses. Its lending model uses digital payment records, point-of-sale (POS) transactions and business cash flows to assess borrowers, rather than relying solely on traditional collateral.

The latest investment follows NeoGrowth's Rs 300 crore Series D equity funding round in December 2022, which was also led by FMO alongside existing investors.

NeoGrowth targets India's underserved small businesses

Access to credit remains a challenge for many small businesses, particularly those without substantial assets to offer as collateral or extensive borrowing histories with traditional financial institutions.

NeoGrowth addresses this gap by providing financing tailored to businesses' operating cash flows and digital transaction histories.

Its loan products include both collateral-free and collateral-based financing for MSMEs. The company also offers flexible repayment schedules, including daily, weekly, fortnightly and monthly collections.

This approach allows repayment structures to better reflect the cash flows of different types of businesses.

According to the company, NeoGrowth operates in more than 25 cities across India, serves over 80 business segments and has supported more than 1 lakh businesses.

Using digital payments to assess creditworthiness

A key part of NeoGrowth's lending model is its use of technology and data analytics to evaluate borrowers.

Instead of depending entirely on conventional collateral requirements, the company analyses digital payment data, POS transactions and business cash flows to assess a business's ability to repay a loan.

This approach is relevant for retailers, traders, manufacturers, distributors, kirana stores and service providers whose financial activity may be visible through digital transactions even when traditional credit records are limited.

Digital lenders are increasingly using GST records, banking transactions and payment histories to build a more detailed picture of small businesses' financial health.

For lenders, these data sources can help inform credit assessments. For business owners, they can potentially create additional routes to financing.

FMO and LeapFrog back the next phase

The Rs 85 crore funding round includes both equity and debt, although the company has not disclosed the individual contribution from each investor or the precise split between the two funding instruments in the supplied report.

FMO, a Dutch development finance institution, previously led NeoGrowth's Rs 300 crore Series D round in December 2022.

LeapFrog Investments, an existing investor, also participated in the latest financing.

The new capital is intended to support the growth of NeoGrowth's loan book toward approximately Rs 3,000 crore. The company says it expects to reach that level before needing another equity infusion.

This makes the latest funding part of a broader effort to expand lending capacity while managing when additional equity capital will be required.

India's MSME lending market attracts more capital

NeoGrowth's latest fundraise comes amid continued investor interest in technology-enabled lending for small businesses.

Many MSMEs need working capital to purchase inventory, pay suppliers, manage operating expenses and finance expansion. However, conventional lending processes can be difficult for businesses with limited collateral or incomplete credit histories.

Digital lenders are developing alternative ways to evaluate these borrowers and structure financing around their business activity.

Recent funding rounds across the sector highlight this interest.

In February 2026, Prayaan Capital raised Rs 110 crore in a Series A round led by Peak XV Partners to build its technology-led MSME lending platform.

In August 2026, GetVantage secured Rs 63 crore in Series A1 funding to expand its cash-flow-based financing platform.

Business Nextgen Finance also raised Rs 215 crore in equity to expand its technology-enabled secured lending operations for underserved MSMEs.

Earlier investments included FlexiLoans' Rs 375 crore Series C round in June 2025 and Techfino's Rs 65 crore fundraise that same month to expand its technology-enabled lending business in smaller cities.

Together, these investments reflect the range of approaches being used to serve India's small-business credit market, from cash-flow-based financing to secured lending and technology-driven underwriting.

What the Rs 85 crore funding means for NeoGrowth

NeoGrowth plans to use the latest proceeds to increase its lending capacity and grow its loan book toward Rs 3,000 crore.

The company's next phase will depend on its ability to extend credit to more businesses while assessing repayment capacity and managing lending risks.

Its digital transaction-based approach provides an alternative to relying solely on collateral, but expanding a loan book also requires disciplined credit assessment and effective collections.

With FMO and LeapFrog backing the business, NeoGrowth has secured additional capital to pursue its next stage of growth.

The larger opportunity lies in serving small businesses that need financing but may not fit conventional lending models. Whether NeoGrowth can expand sustainably will depend on how effectively it balances wider credit access with portfolio quality and capital efficiency.