When Covid-19 struck in 2020, various tech startups were uniquely geared to serve consumers and companies, enjoying an unexpected bounce in business. Indian digital lenders, which had improved credit access and built large books in the preceding years, were not part of that productive group. 

They were caught out by a pandemic-time moratorium on loan repayments, bulging bad assets and regulatory pressure resulting from Chinese app scams. In their season of woe, they struggled to secure funding even as the broader startup ecosystem received a bountiful supply.

Instant lending platform KreditBee, based in Bengaluru, was among the down-on-their-luck players. Unlike some others, it faced an additional headache: it had a co-founder, angels and institutional investors from China, who held a significant stake. Their involvement ran afoul of Indian authorities’ new limits on Chinese investments following the 2020 border tensions. 

On the business side, KreditBee was weighed down by exposure to unsecured, short-term personal loans, the segment where collections fell the hardest during the pandemic. So, from boasting a profit of Rs 130 crore in FY20, it went on to nurse losses of Rs 100 crore in FY21.