Amid rising focus on bridging India’s MSME credit gap, Chennai-based Prayaan Capital has raised Rs 110 crore in a Series A funding round led by Peak XV Partners. The capital infusion comes as the MSME lender aims to build a technology-driven platform and expand access to credit for underserved small businesses.
Prayaan Capital is led by Rangarajan Krishnan, former joint managing director and CEO of Five-Star Business Finance. Krishnan recently acquired a controlling stake in the company and plans to position it as a technology-enabled lender that combines on-ground underwriting with digital tools across sourcing, underwriting, and collections.
The fresh funds will be used to strengthen the lending platform, expand the team, and increase the company’s presence across key MSME markets.
“Small businesses are the backbone of India’s economy, yet millions remain underserved by formal credit. Prayaan Capital is built on the belief that combining deep customer understanding with technology can meaningfully expand access,” Krishnan said.
“I am grateful to partner with Peak XV, who have been long-term believers in this segment and have supported me through multiple chapters of my journey,” he added.
The funding comes at a time when India’s MSME sector faces an estimated $300 billion credit gap. This has opened opportunities for fintech lenders leveraging digital underwriting models and scalable distribution strategies.
Peak XV Partners said its investment builds on a long-standing association with Krishnan. “We have known Ranga for over 15 years, and our partnership has been shaped by a shared commitment to expanding access to credit for small businesses,” said GV Ravishankar, managing director at Peak XV Partners. “Having seen firsthand the impact they created at Five-Star, we are excited to partner with them from day one as they build Prayaan Capital.”
India is home to about 70 million MSMEs employing nearly 300 million people. However, limited access to formal credit continues to constrain growth, creating strong demand for technology-led lending solutions.
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