India's OfBusiness achieves $5b valuation with Series G
OfBusiness, an India-based B2B platform focused on industrial supply chain and procurement services, has raised $325 million in Series G funding at a valuation of $5 billion.
The round was led by Alpha Wave Global – known until recently as Falcon Edge Capital – Tiger Global Management, and SoftBank Vision Fund 2. It included a $140 million tranche of secondary shares.
OfBusiness has seen its valuation grow more than sixfold across four rounds in the past eight months: from $800 million in April when Falcon Edge led a $110 million Series D extension; to $1.5 billion in August when SoftBank took the lead in a $160 million Series E; to $3 billion in September when Tiger Global fulfilled the same role in a $200 million Series F; and finally, the Series G.
The secondary tranche facilitated partial exits for early backers such as Zodius Capital, Matrix Partners India, and Creation Investments. It also allowed approximately 80 employee stock ownership plan (ESOP) holders to liquidate a portion of their shares.
The company was set up in 2016 by five founders who came from manufacturing backgrounds. They recognized the potential for B2B disruption of small and medium-sized enterprise (SME) procurement processes and focused on industrial supply chains, bringing price transparency and opportunities for cost savings through bulk buying. The founders did the underwriting collectively.
“Our assessments are based on live transactional data, how companies interact with suppliers and customers. Conventional banks don’t look at that. They are conservative in their approach, and they don’t understand the nuances of micro supply chains,” Vasant Sridhar, one of the co-founders, told AVCJ in August.
“We realized we would have to do the sourcing and underwriting ourselves. And if we were doing that, why rely on bank balance sheets to issue loans? We might as well do the full stack ourselves. It gives us more flexibility, a stronger hold on the customer, and more profit.”
The starting point was Bid Asset, a searchable information source on government tenders in India and overseas. SMEs that came to the platform were pitched value-added services, such as raw materials procurement. This was followed by a non-banking financial company (NBFC), Oxyzo Financial Services, which issues credit lines to SMEs and supplies materials against these lines.
On launching the NBFC, OfBusiness was generating $5-7 million in gross merchandise value (GMV) per month. As of August, it was $70-80 million per month, for an annual GMV run rate of almost $1 billion. Financing is responsible for 40% of revenue and 60% of profit – the rest comes from marketplace services.
The new funding will be used to deepen OfBusiness’ penetration of supply chains and to build out capabilities in software-as-a-service (SaaS) solutions and financing, according to a statement.
Other private equity-backed B2B marketplaces in India include Infra.market, Moglix, Zetwerk, and Udaan. OfBusiness has become the most valuable, based on the latest funding rounds.
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