• Creation Investments and Falcon Edge were the lead investors in the fundraise
• Existing investors Matrix Partners India and Zodius Capital also participated
• OfBusiness will use the funding to source funds from banks and other NBFCs for onward lending
Gurugram-based SME lending startup OfBusiness has raised $29.2 Mn (INR 200 Cr) in a Series C funding round from Creation Investments and Falcon Edge.
The funding round also saw participation from the company’s existing investors Matrix Partners India and Zodius Capital.
“With this, the total capital raised by OfBusiness as a mixture of debt and equity reaches $73.1 Mn.”
Asish Mohapatra, the chief executive officer of OfBusiness, said he would leverage the ₹200 crore funding four times to source funds from banks and other NBFCs for onward lending.
Earlier, in October 2017, OfBusiness secured $3.8 Mn (INR 25 Cr) in debt funding from Kotak Mahindra Bank. The funding came as an extension to the $7.6 Mn (INR 50 Cr) working capital limit that the startup procured from the bank at that point in time.
Prior to this, in December 2017, the startup secured another $11 Mn (INR 75 Cr) in a round led by Zodius Capital and Matrix Partners. The company counts Patni Group’s Apoorva Patni, Ola co-founder Bhavish Aggarwal, Quikr co-founder Pranay Chulet and Limeroad co-founder and CTO Prashant Malik as its investors.
Also, OfBusiness raised $5 Mn Series A investment from Matrix Partners India in February 2016.
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OfBusiness was founded in 2015 by Asish Mohapatra, former VC at Matrix Partners; Bhuvan Gupta, ex-vice president of engineering at Snapdeal; and Ruchi Kalr, former McKinsey partner.
The startup operates on a technology-driven platform that couples lending with value-added services as procurement and marketing. It serves as a single-window for SMEs to get secured and unsecured credit lines, which the SMEs can use for cost-effective procurement of raw material on the platform.
“Besides basic lending to our customers, we also offer services like supplying of materials as well as provide companies with a portal to bid for government tenders,” said Asish Mohapatra. “We have directly partnered with manufacturers of raw materials these companies usually need. This helps us generate revenue from our lending business as well as our service delivery business.”
OfBusiness founders currently claim to have about 30% of the borrowing entities being in the infrastructure business with an annual turnover between $731K- $14.6 Mn (INR 5-100 Cr). Ashish Mohapatra further claims to have disbursed about 60% of its loans without any collaterals. For collaterals, the company relies on bank guarantees or letter of credit from lenders.
“Our interest rates hover around 1.5% per month, and because of our value proposition to these enterprises, we have been able to restrict bad loans to around 0.5%,” he said.
In a statement, the founders further said that OfBusiness has extended loans to about 2,500 small enterprises working in the infrastructure and manufacturing sectors. The total loan book of OfBusiness stands at $36.5 Mn (INR 250 Cr) with a monthly disbursal of $14.6 Mn (INR 100 Cr).
SME lending has been touted to be a $300 Bn market in 2016 and was expected to rise by 11% till 2019, as per a November 2017 report by Crisil. Other notable players in the Indian SME lending space are Capital float, LendingKart, Quikrupee, SMEcorner, Innoviti, Biz2credit, smehelpline, and smegetmoney, among others.
[The development was reported by ET.]