Every Year, They Just Survived: The Progcap Story

The restaurant is full. Warm lighting, low conversation, the familiar hum of ordinary evenings playing out across tables. Families marking small occasions. Nothing unusual.

At one table, there is a quieter gathering. It is Pallavi Shrivastava’s daughter’s second birthday.

A year ago, the first had been loud. Friends, movement, celebration that spills over. The easy confidence of people whose lives are still moving in predictable directions.

This time, the circle is smaller. Family only. The decision had already been made earlier in the day. The larger celebration was not an option.

The bill arrives. It is placed on the table, folded. Pallavi picks it up. Looks at it. Pauses. Puts it down. Picks it up again, just to be sure.

The number doesn’t change.

She looks around the table. Himanshu isn’t there yet. Running late. Caught somewhere between meetings, calls, and the constant friction of trying to hold a business together.

She stands up. Walks to the washroom. Closes the door. And breaks down.

Outside, her brother watches the delay, understands enough, and quietly settles the bill.

Inside, she is leaning against the sink, trying to process what just happened. “I couldn’t even tell my brother that this is a large bill I can’t pay,” she recalls. “And we were never like that. It was crazy.”

The moment is small. The weight isn’t. Because it is not about the bill. It is about everything that led to it.

Eighteen months earlier, both Pallavi and Himanshu were operating at the top end of the financial system.

Pallavi was working across emerging markets at the World Bank and the International Finance Corporation, building large-scale frameworks around financial inclusion. Himanshu was deep inside private equity and structured finance, working across corporate supply chains and capital flows.

They understood money at scale. Liquidity, risk, yield, and structure. They had careers that worked: Predictable, respected, and well-compensated.

When they left in 2016, the decision had been framed with logic.

Try this. If it works, continue. If it doesn’t, go back. A clean fallback. It made the leap feel manageable.

It didn’t survive contact with reality, though. “The reality hits that you are never ready to go back,” she says. There is no single moment where that shift happens. Just a gradual realisation that the person who could return to that life no longer exists.

The early days offered no relief. There was no early traction, no sudden validation, and no investor conviction. All they had was just time, and time behaving differently. It was not moving forward but stretching.

They spent most of 2017 across tables from investors. The response was consistent. The idea made sense, the problem was real, but it needed proof, scale, execution, and data. ‘Come back later’ was how the conversations ended.

It created a closed loop. Scale needed capital, and capital demanded scale.

So, they looked inward. Savings first. Then more savings. Then family. Every available rupee was pulled into the system. Because this wasn’t a business you could pause.

Progcap was not software. It was lending. And lending has a mechanical constraint most founders don’t fully grasp until they are inside it. Once you open the pipe, you don’t control the flow anymore. You are responsible for it. If you lend to a merchant today and withdraw tomorrow because your own capital dries up, you don’t just pause growth. You break trust. And in credit, trust is the only asset that compounds. So, the pipe has to keep running.

Even when you don’t know where the next rupee is coming from. That constraint changed everything. Every decision carried weight. Every delay had consequence. Every mistake compounded.

And then came the failure that nearly shut everything down. Neither founder came from a product or engineering background. They understood credit. They didn’t build software. So, they outsourced it. A significant portion of their remaining capital went into an external firm tasked with building the platform.

Months into the engagement, the firm shut down. No warning, no transition, no product. The codebase didn’t exist. The capital was gone. They were back to zero. There were months when salaries couldn’t be paid. Days when the next thirty days had no visibility. Nights that collapsed into one repeating question: What happens tomorrow.

But the routine outside didn’t change. Every morning, they showed up. Dressed, on time, and structured. Working out of a small basement office, but treating it like an institution. Because if this was going to work, it had to look like it already did. There wasn’t a single day where quitting became a serious option. The anxiety was constant. But so was the conviction. Beneath all the noise, they had seen something others hadn’t: A structural gap. And a different way to solve it.

Back at the restaurant table, the bill gets paid. The dinner ends. The evening moves on.

But something else stays: A quiet recalibration. This isn’t temporary, this isn’t a phase. This is the business. And from here on, survival is not an outcome. It is the condition for everything else.

What kept them going through that period wasn’t just persistence. It was clarity.

The duo wasn’t guessing at the problem. They had both seen it up close, from different ends of the same system.

Traditional banks looked at India’s small businesses through a narrow lens: Unstructured, unpredictable, and expensive to underwrite. A retailer in a tier II or III town didn’t come with audited financials. There was no clean balance sheet. No formal credit history. No reliable documentation that fit into a bank’s standard risk framework.

From the outside, it looked messy. From a bank’s perspective, it looked inefficient, high effort, low ticket size, and difficult to scale. So, the system responded the only way it knew how: Avoid. Or price it high enough to compensate for uncertainty.

That left a massive segment of the economy operating in a strange middle ground. It was active, productive but invisible to formal finance. Pallavi had spent years studying this gap from the top down.

At the World Bank and the IFC, she had seen how access to credit could transform economies when the structure was right. She had seen models where the problem wasn’t willingness to lend, but the inability to assess risk in a way that scaled. It wasn’t that these businesses were inherently risky. It was that the system didn’t know how to read them.

Himanshu, for his part, had seen the same landscape from a different vantage point: Inside corporate supply chains.

Large manufacturers, distributors, layers of movement between production and retail. Goods moved in predictable patterns. So did money. The system already had structure. It just wasn’t being used for credit.

The insight came from putting those two views together. You didn’t need to underwrite the retailer in isolation. You could underwrite the relationship. If a small merchant was consistently buying inventory from a known distributor, who in turn was anchored to a large corporate, that transaction flow carried information, frequency, volume, consistency and behaviour.

It was everything a lender needed to assess risk was already there. It just wasn’t being captured. So, instead of building a model that started from the bottom, they flipped it.

Start from the top, anchor to the corporate, map the supply chain, track the movement of goods, and digitise the flow. Once the system becomes visible, credit stops being a guess. It becomes a function. If you know how much inventory a retailer is buying, how often, and from whom, you don’t need collateral in the traditional sense. You have behaviour. And behaviour, over time, is more reliable than static documentation.

This was not a fintech shortcut. It was a structural shift. They weren’t trying to disrupt the system. They were trying to read it differently. And if that worked, the implications were large. Because the MSME segment is not a niche. It sits at the centre of the economy, contributes over a third of India’s GDP, employs hundreds of millions. And yet operates with limited access to formal credit.

By the time the model began to hold, the market had already moved ahead. What had been a quiet, underexplored segment was suddenly crowded. MSME lending was no longer a gap. It was a theme.

By 2021, capital was everywhere. Global liquidity had found its way into Indian startups. Venture funds were deploying aggressively. Fintech, particularly lending, became one of the most attractive sectors to back.

A massive underserved market, digital rails improving, and data becoming accessible. It looked like an inevitability. And when something looks inevitable in venture capital, money follows.

New players entered the space with speed. Large rounds, aggressive mandates and clear instructions to grow fast. The result? Loan books expanded, ticket sizes increased, and segments widened. Companies moved from structured supply chain lending into unsecured open-market lending, consumer credit, and adjacent products.

The idea was to capture as much of the market as possible before someone else did. Growth became the signal. Everything else could be fixed later.

The pressure for the Progcap cofounders was not abstract. It showed up in conversations with investors, with partners, and with the ecosystem. Why aren’t you growing faster? Others are doubling. Why not you?

It was a fair question. On the surface, the opportunity looked identical for everyone. But they weren’t looking at the surface. “We never started to build an investable startup,” says Pallavi.

It is a line that sounds simple. It isn’t. Because it rejects the central logic of that moment. They weren’t building for valuation. They weren’t optimising for the next round. They weren’t expanding into segments they didn’t understand just to show scale. They were still trying to make the model work. That created tension. Because the market was rewarding something else: Speed, expansion, and narrative.

Companies that grew faster looked stronger, raised more, and scaled wider.

On paper, they were winning. But lending doesn’t behave like software. In software, if you scale too quickly, systems crash. Users drop off. The problem is visible.

In lending, the problem is delayed. You issue a loan today. The outcome shows up much later. Sometimes years later. “Growing too fast will come back to haunt you,” says Himanshu. “Not immediately. Maybe two years later.”

He had seen that cycle before. He knew how it ended.

So, they made a choice. Not to withdraw but to stay within the boundaries of what they understood.

They stayed anchored to corporate-linked supply chains, retailers they could track, cash flows they could read, and relationships they could verify.

But they also flirted with non-core experiments. They stepped outside their core model in controlled ways. Larger ticket sizes, open network lending, and segments where the data wasn’t as structured.

The results were immediate. “Whenever we have gone outside that, we failed,” he says.

There was no ambiguity in the outcome. It didn’t work.

That clarity simplified decisions.

First, stay where you understand the risk. Second, go deeper and not wider.

At the same time, they tightened the system further, not in response to the market but in response to the business itself. Underwriting became sharper, collections more disciplined, risk controls tighter, and governance non-negotiable. Because in lending, scale without control is not growth. It is exposure. “We do those things even at the cost of not growing,” says Pallavi.

That choice had a visible cost. Their growth looked slower. Their expansion looked limited. Their story didn’t travel as far.

For a period, it looked like they were being left behind.

Others were announcing larger numbers, faster disbursements, bigger rounds. The gap widened. On the surface, it was clear who was winning. Inside the system, it wasn’t as obvious. Because the variables that mattered weren’t visible yet. They were building, accumulating, waiting.

That phase came with its own set of mistakes. The harder lessons came later, at scale.

After the fundraise, they started hiring senior leaders. People with decades of experience in banking and financial services. The assumption was straightforward: bring in people who had seen it before, step back, and let them build.

Most of those leaders had operated inside structured environments. Systems already existed. Processes were defined. They knew how to run them, not build them from scratch.

Progcap didn’t have that luxury. “We got ahead of our readiness,” recalls Pallavi . “We expected people to come in and build systems, but we hadn’t built the foundations ourselves.”

The gap showed up slowly. Decisions that needed founder context got delayed. Problems that were known weren’t fixed in time. In some cases, teams stayed in place longer than they should have, because making people calls felt harder than making business calls. “We were terrible at making changes when it came to people,” she says. “Doing it earlier would have been better for everyone.”

The correction was uncomfortable. Step back in. Build the systems yourself. Lean forward, not away. Because in their experience, the sequence mattered. Systems first, then scale, and everything else was a shortcut that came back later.

Even in the early days, the pattern had been the same. Problems you see and don’t solve don’t disappear. They compound. “The first 100 customers teach you everything,” she says. “You just spend the next few years fixing what you already knew.”

That became the rule. Fix early or fix it later at a higher cost. And over time, those costs don’t stay contained. They show up in the system.

And then, slowly, the market caught up with the decisions they had already made.

The turn didn’t come with an announcement. There was no single moment when the market declared that it had gone too far.

It showed up in fragments.

A delay here, a missed payment there, a portfolio that didn’t behave the way it was supposed to. At first, it looked like noise. Then it started to repeat. By late 2023, the pattern was clearer. Losses began to widen across the ecosystem. Companies that had scaled rapidly on unsecured lending started reporting stress.

Delinquencies climbed, write-offs followed, and regulatory scrutiny tightened.

And then the second layer hit: Capital pulled back. Because in lending, the borrower is only half the equation. The other half is the lender, the institution that funds the loan. And when that side loses confidence, the entire system tightens.

Demand didn’t disappear. Small businesses still needed credit, inventory still had to move, and cash cycles still had to be managed. But the capital that funded those cycles became cautious, selective, and in some cases, unavailable. That is where lending businesses get tested. Not when demand is high but when capital is uncertain.

Progcap had to go back to its lending partners. One by one. Not with projections, not with narratives but with data. They opened up their books–line by line, portfolio by portfolio–showing what had worked, explaining what hadn’t, and walking through decisions that had slowed growth but protected the system.

This wasn’t a pitch. It was a review. And the outcome depended on something they had been building quietly for years: Credibility.

When capital becomes cautious, it stops rewarding stories. It starts asking questions. And the answers have to hold.

This is what Progcap did. Not perfectly but well enough for lenders to stay, for the lines to remain open.

That was the difference. Not growth but continuity. Behind that continuity was a layer the market rarely sees: Compliance, structure, and discipline that doesn’t show up in growth charts. An MSME in India operates under more than a thousand regulatory requirements. Progcap’s own business had far more: Roughly 3,500.

Every loan, every report, every process, small checks…repeated constantly. “There has to be a fair degree of paranoia,” says Pallavi. Because in lending, mistakes don’t arrive suddenly. They build quietly. And when they surface, they don’t come alone.

There were decisions along the way that made the business look worse before it looked better. Changes that temporarily increased delinquency numbers and corrections that slowed disbursements. They still went ahead. Because the alternative was predictable. Delay the problem or solve it early.

By the time the cycle corrected, those decisions started to show up differently.

The numbers, when they came, were hard to ignore.

In FY25, revenue from operations jumped 93% to ₹268 crore, up from ₹139 crore the year before, according to data accessed from Entrackr. Losses, which had once defined the business, dropped 87% to ₹6 crore. EBITDA turned positive at ₹75 crore, with margins nearing 28%.

It looked like a turnaround. It wasn’t. Nothing had changed that year. The system had already been built. “Yeah, life has been good. God has been kind,” she says.

Then she pauses. “RBI keeps us on our toes.” She laughs.

It’s not a line. It’s a view. That this doesn’t end. That the system is never complete. That the next test is always closer than it looks. “We are sort of surviving every year,” she says. “Every year, it’s like we managed to survive one more year.”

She laughs again. Himanshu doesn’t interrupt. Because that’s the part the market doesn’t see. Growth is visible. Survival isn’t. It sits in the decisions that don’t get announced, in the risks that don’t get taken, and in the problems that are fixed before they become visible.

Back in 2018, survival was instinct. It was a reaction to pressure. Now, it is built into how they operate. They don’t run the business to win once. They run it to stay. Every year resets the equation. Every cycle tests the system again. Every decision carries forward. They didn’t grow the fastest. They didn’t scale the widest. They didn’t follow the playbook. They did something simpler: They lasted.

One more year. Still here.