Investment Case Study: DrutoLoan: Bridging $2.8 Bn Credit Gap for MSMEs in Bangladesh
Drutoloan-দ্রুতলোন , meaning “Quick Loan” in Bangla, is a fintech startup on a mission to revolutionize access to credit for Micro, Small, and Medium Enterprises (MSMEs) in Bangladesh. With over 8.1 million MSMEs contributing nearly a third of the country’s GDP, yet 91% lacking formal financial access, the sector faces a staggering $2.8 billion credit gap.
Drutoloan is addressing this critical challenge by leveraging technology, alternative credit scoring, and strategic partnerships with financial institutions to deliver fast, reliable, and inclusive lending solutions. As part of Turtle Venture Studio‘s pilot cohort in 2022, I addition to investments, we’ve supported Drutoloan with product development, strategic partnership and investment readiness
This case study explores how Drutoloan is uniquely positioned to bridge the MSME credit gap, why Turtle Venture Studio chose to invest, and what lies ahead for this promising venture.
The Problem: A Growing Credit Gap in the MSME Sector
Bangladesh’s MSME sector is growing at 6% year-over-year and contributes 27% to the national GDP. It generates an impressive $450 billion in annual output and employs 70% of the workforce. Despite its economic significance, 91% of MSMEs remain underserved by traditional financial institutions.
This has resulted in a $2.8 billion credit gap , which is widening at a rate of 9% annually. The reasons are manifold:
- High Cost-to-Return Ratio : Traditional banks face similar operational costs whether issuing a small or large loan, making low-ticket loans economically unattractive.
- Rigid Credit Scoring Systems : Most banks rely on outdated criteria that fail to assess informal or cash-based businesses accurately.
- Lack of Formal Financial Data : Many MSMEs operate without digital footprints or formal banking records, making them “invisible” to lenders.
- Low Financial Literacy and Loan Readiness : Many entrepreneurs lack the knowledge or support to prepare viable loan applications.
With government initiatives like the $500 million refinancing scheme falling short of demand, the stage is set for innovative players like Drutoloan to step in and transform the lending landscape.
The Solution: Simplified Digital Lending for MSMEs
Drutoloan offers a tech-enabled, end-to-end digital lending platform tailored specifically for the needs of MSMEs in Bangladesh. Their solution includes:
- Alternative Credit Scoring: Instead of relying solely on traditional financial data, Drutoloan uses over 100+ data points — including supplier relationships, transaction history, and business performance metrics — to build a comprehensive credit profile for each MSME.
- End-to-End Digital Lending: From application to disbursement, the entire process is digitized, enabling faster approvals and reducing friction. This eliminates the need for in-person visits and lengthy paperwork.
- Loan Readiness Support: Drutoloan provides on-site assistance to help MSMEs prepare their documentation and improve their chances of approval — a critical service given the low level of financial literacy among many entrepreneurs.
- Strategic Partnerships: Rather than building a full-fledged banking infrastructure from scratch, Drutoloan partners with existing financial institutions to act as a bridge between MSMEs and capital providers . These include banks, microfinance institutions (MFIs), and non-banking financial institutions (NBFIs).
The Founders: A Hustler Team with Deep Domain Expertise
At the helm of Drutoloan is a founding team with decades of combined experience in finance, operations, and regulatory compliance:
- Abdul Gaffar Sadi (CEO) – Over 10 years in MSME lending, with deep insights into the pain points of small business financing.
- MD. Tushar (COO) – An operations and growth expert with a background in finance and startup scaling.
- Shahidul Islam (CLO) – A legal and compliance specialist focused on financial services, ensuring Drutoloan operates within complex regulatory frameworks.
Their domain expertise, hustle mentality, and laser focus on MSMEs were key factors that attracted Turtle Venture Studio’s interest.
Why We Invested: The Investment Thesis
Turtle Venture Studio’s decision to back Drutoloan was based on four core pillars:
- Massive Market Potential: The MSME credit gap represents not just a problem but a $50 billion opportunity across developing markets like Bangladesh. With 8.1 million MSMEs and rising demand for credit, the market is ripe for disruption. Banks are now under pressure to increase SME lending, thanks to mandates from Bangladesh Bank requiring at least 25% of loan portfolios to be allocated to SMEs. However, most banks lack the tools to serve these borrowers effectively — a gap Drutoloan fills.
- Laser Focus on MSMEs: Despite multiple opportunities to expand into personal lending or broader consumer finance, Drutoloan has remained steadfastly focused on serving MSMEs. This discipline resonates deeply with our investment philosophy — solving one big problem exceptionally well. Their vertical-specific approach allows them to build hyper-relevant products and processes that resonate with local entrepreneurs.
- Hustler DNA: Operating in Bangladesh’s highly regulated financial ecosystem requires grit, persistence, and resourcefulness — qualities the Drutoloan team possesses in abundance. They’ve successfully navigated licensing hurdles with cooperative banks and MFIs, secured necessary regulatory approvals, and built trust with financial institutions. Their ability to hustle through bureaucracy while maintaining compliance is rare and valuable.
- Scalable Technology Stack: At the heart of Drutoloan’s success is its alternative credit-scoring engine , powered by machine learning and advanced analytics. This allows them to onboard even informal businesses with no prior credit history.
To date, they’ve disbursed 15873 loans of total $8.8 million across 13,000+ active MSMEs, all while maintaining a zero-default rate.
Their platform is also designed for seamless integration with partner institutions, enabling rapid scale without significant infrastructure investment.
Future plans include integrating AI/ML to further enhance risk assessment and automate more of the lending process.
Growth Opportunities: Scaling the Impact
Drutoloan is well-positioned for exponential growth through several near-term levers:
- Riding the Wave of Digital Adoption: As smartphone penetration and digital literacy rise across Bangladesh, Drutoloan’s mobile-first lending model is poised to capture a growing share of the market.
- Expanding Institutional Partnerships: Building more alliances with banks and MFIs will allow Drutoloan to multiply its loan disbursements quickly. Their role as a loan aggregator and credit facilitator makes them attractive partners for institutions looking to grow their SME portfolios efficiently.
- Leveraging Government Programs: Initiatives like the Credit Guarantee Scheme and refinancing programs from Bangladesh Bank provide fertile ground for Drutoloan to extend collateral-free loans to first-time borrowers — especially women entrepreneurs. Additionally, cluster development programs and incubation centers offer new touchpoints to reach underserved MSMEs.
The Journey: With Turtle Venture Studio
As a venture studio, Turtle Venture Studio works closely with its portfolio startups at the co-founder level — from product development to branding, fundraising, and operational scaling. Since joining our pilot cohort in 2022, Drutoloan has been on an intense but rewarding journey of transformation.
Together, we’ve achieved some impressive milestones:
- Built and deployed a working MVP (Minimum Viable Product) with credit-scoring engine, which now uses over 100+ data points to assess MSME creditworthiness.
- Disbursed $8.8 million in loans to more than 13,000 MSMEs — all while maintaining a zero-default rate.
- Completed a rebranding initiative led by our design team, aligning the brand voice and visual identity with the startup’s mission and audience.
- Launched onboarding pilots with major microfinance institutions like UDDIPAN, Centre for Development Innovation and Practices – CDIP and Sojon and are in advanced discussions with national banks to scale their reach.
- Strengthened compliance frameworks to meet Bangladesh Bank and regulatory requirements, allowing them to operate within legal boundaries while innovating.
- Became investment ready with compelling storytelling, financial modeling, cap table structuring, and pitch deck development.
Till date, Drutoloan has raised $390,000 from Angel investors from Singapore, Indonesia, USA & UAE giving unrealized MOIC of 2.1X to Turtle Venture Studio considering complete dilution.
The Challenges: Making Founders’ Lives Harder
Operating in the financial inclusion space in Bangladesh comes with unique challenges — especially when you’re trying to change how traditional systems work.
- One of the biggest hurdles Drutoloan faces is the rigid and slow-moving regulatory environment. While there’s growing support for fintech innovation, many regulations still favor legacy players and make it difficult for startups to integrate or scale quickly.
- Another challenge is the low digital literacy among MSMEs,, especially in rural areas. Many small business owners are unfamiliar with digital financial services, making adoption slower than expected. This often requires field-based support, increasing customer acquisition costs.
- Moreover, financial literacy remains low, and many entrepreneurs don’t understand the importance of building credit profiles or managing cash flows. As a result, even when financing is available, it’s not always used effectively — increasing risk and requiring additional handholding.
- There’s also the issue of trust. Traditional banks have failed to serve MSMEs well, creating skepticism toward formal financial institutions. Drutoloan must continuously prove its value and reliability through consistent service delivery and transparency.
- Lastly, despite government initiatives like the Credit Guarantee Scheme, access to these programs is still limited and fragmented. Navigating this ecosystem takes time, persistence, and strong local networks — all of which the Drutoloan team is actively building.
But these very challenges are what make Drutoloan’s mission so important — and why we believe they’re positioned to become a defining player in the future of MSME finance in Bangladesh.
Conclusion: Building the Future of MSME Finance in Bangladesh
Drutoloan is more than a fintech startup — it’s a catalyst for economic empowerment. By bringing innovation, inclusivity, and efficiency to MSME lending, the company is helping unlock the full potential of millions of small businesses across Bangladesh.
For Turtle Venture Studio, backing Drutoloan was not just about tapping into a massive financial opportunity — it was about supporting a team with the vision, grit, and execution power to drive systemic change.
We’re excited to see where this journey takes them next.
