Gurugram-based B2B marketplace and SME lending firm Power2SME has raised debt financing of $6.2 Mn (INR 40 Cr) from InnoVen Capital.
Power2SME will use the debt funding towards propelling the company’s growth and working capital.
Commenting on the financing, R.Narayan, Founder and CEO, Power2SME said, “Power2SME has had a long-standing association with InnoVen. Raising venture debt helps us conserve equity, minimise dilution and extend the runway. Our partnership with them brings to the table their extensive expertise and will help accelerate our transformation while better positioning us to execute on our strategy and mission to enhance our business offerings for the MSME sector.”
Founded in 2012, Power2SME aggregates raw material and product demands from small and medium businesses and places bulk orders with suppliers and manufacturers, thereby ensuring competitive prices.
The company achieves the pricing power through the aggregation of demand from various SMEs across the country and negotiating a better deal for SMEs with large suppliers in specific sectors.
Its portfolio addresses challenges in raw material procurement, finance and maintenance, repair and operations needs.
On the investment front, Ashish Sharma, CEO, InnoVen Capital India said, “We are pleased to partner with Power2SME, a leading B2B commerce marketplace in India backed by a strong group of investors. In addition to venture debt, we will also support their working capital needs through our partner financial institutions.”
Power2SME has over 50,000 SMEs on its platform and currently operates in SME hubs of Gujarat, Maharashtra, West Bengal, Tamil Nadu and Delhi-NCR. The fintech platform of the company, FinanSME.com connects empaneled lenders with SMEs. It helps them to procure working capital finance from banks and non-banking financial institutions for purchases on its platform.
Power2SME also offers a one-stop shop addressing SME MRO needs (SMEShops.com) to meet the growing and frequent requirements of the SME buyers for consumable industrial goods.
In September 2017, the company raised about $46 Mn in equity financing from its existing backers including International Finance Corporation (IFC). Other investors include Inventus Capital Partners, Accel Partners, Kalaari Capital and Nandan Nilekani.
The MSMEs account for 45% of the country’s industrial output and 40% of its exports. The same report by the Ministry of Micro, Small and Medium Enterprises, there are 48.8 Mn MSMEs in India, which employ 111 Mn people.
As banks and the NBFCS cater to about $150 Bn of the SME needs, unfulfilled needs fall anywhere between $20-500 Bn, leading to a new industry opening up in SME lending. As the market of SME lending is still at a nascent stage, this space has been witnessing various startups sprouting up with investors also believing in the potential of the segment.
With players like Power2SME supporting the growth of SMEs through multiple sources, the recent investment by InnoVen Capital promises the continuous growth in the segment.