Ofbusiness becomes India's 18th unicorn of 2021

The investment has made OfBusiness one of India’s 54 technology unicorns, with 18 achieving this status in 2021 alone. It confirms a broader surge in funding for the sector, with approximately $20 billion put to work so far this year, including $12.8 billion in growth rounds. The record annual total, set in 2015, is $15.5 billion, although the growth portion was only $4 billion.

Investor sentiment has been buoyed by strong commercial performance from leading technology players following COVID-19. At the same time, they have a sightline to liquidity via domestic IPOs. Zomato’s recent INR93.7 billion ($1.26 billion) offering demonstrated that India’s public markets are ready to accept internet start-ups, and various other companies have made filings or are preparing them.

SoftBank contributed $150 million to the latest OfBusiness round, with Falcon Edge Capital and Matrix Partners providing the balance. As recently as April, Falcon Edge led a $110 million round at a valuation of $800 million. Matrix, Norwest Venture Partners, and Creation Investments also took part in that round – billed as a Series D extension – while employees and angel investors sold $13 million in shares.

The company, which has now raised $330 million since its inception in 2015, helps small to medium-sized enterprises (SME), especially those in manufacturing and construction, with a range of B2B supply chain, materials procurement, and logistics services. It also has capacities in marketing and provides project financing through unsecured credit lines.

CEO Asish Mohapatra told The Economic Times – in a story referenced on OfBusiness’ website – that the new funding would go towards acquisitions and strategic investments. The goal is to gain greater control over supply chains in core areas such as metals, plastics, petrochemicals, industrial chemicals, grains, and building materials.

He noted that the company is already profitable, but M&A would boost profit margins into double digits. OfBusiness is on course to generate $1.1 billion in revenue this year, based on the July figures, while its profit margin is in the 5-10% range. The pre-tax profit run-rate is less than $30 million, but the company expects it to reach $60 million for the 2022 financial year on the back of M&A and expansion.

Marketplace services are responsible for 55% of revenue, with lending and software-as-a-service (SaaS) contributing 43% and 2%, respectively. OfBusiness is keen to develop both smaller verticals. Cash flow financing comes through Oxyzo Financial Services, a dedicated non-banking financial company (NBFC) with a loan book of $200 million. It is growing at an annual rate of 80%.

Indian B2B and SME supply chain marketplaces have proven attractive to private equity, especially where technology upgrades and international expansions can be facilitated. The leader in this category is arguably Udaan, which has raised about $1.1 billion since 2018. It connects manufacturers with various consumer-facing SMEs on an e-commerce-focused platform.

There have also been funding rounds this year for the likes of Moglix, Infra.Market, and Zetwerk. Moglix became a unicorn in May on closing a $120 million Series E. Falcon Edge was one of the co-leads.

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• Topics
• South Asia
• Expansion
• Technology
• Support services
• Industrials
• India
• Softbank
• Growth capital
• SME
• manufacturing
• Falcon Edge Capital
• Matrix Partners