ETtechOfBusiness has raised fresh funding of $160 million led by SoftBank Vision Fund-II, valuing the company at $1.5 billion, its cofounder and chief executive Asish Mohapatra told ET.
The business-to-business(B2B) commerce platform is now the 18th Indian unicorn—startups valued over $ 1 billion—for the year, as record inflow of capital is pumped into the country’s startup economy.
While SoftBank put in $150 million into OfBusiness in this round, Falcon Edge Capital and Matrix Partners contributed the balance. Falcon Edge had earlier led a $110 million financing round in the company, in April, when OfBusiness was valued at $800 million.
Mohapatra said he will use the new capital for acquisitions and strategic investments to gain greater control over the supply chain of its core segments like foodgrains, metals, plastics, petrochemicals, industrial chemicals, food grains and building materials.
“We have been profitable but (acquisitions) will increase our profit margins into double digits. We have reached a scale where we need meaningful control (over the supply chain),” he said.
Launched five years ago, OfBusiness is currently at a revenue run-rate of $1.1 billion, based on its July revenue. The company typically earns margins of 5-10% but (acquisitions) could help OfBusiness take margins up to the early teens and then near the 20% mark.
“We are looking at companies that have revenue in the range of Rs 20-200 crore,” said CEO Mohapatra.
ET first reported about SoftBank’s potential investment in OfBusiness on June 2. So far this year, SoftBank has backed social commerce startup Meesho and banking technology platform Zeta, taking both to the unicorn club. ET reported last month that the Japanese tech investor is likely to double down on portfolio firms like SaaS (software-as-a-service) platform MindTickle with a new cash infusion at a valuation of over $1 billion.
Other Verticals
While the core business for OfBusiness is facilitating commerce, it also has a financing platform--Oxyzo--which is operated through its own non-banking financial company (NBFC) licence.
The lending vertical, the second largest business vertical, has a loan book of $220 million which is growing 80% annually. According to Mohapatra, it has seen non-performing assets (NPA) of less than 1%.
The company also has a SaaS vertical which helps SMEs with online procurement of various tenders in the manufacturing and infrastructure sectors--both Indian and global.
While commerce contributes 55% of its total net revenue, lending and SaaS have a pie of 43% and 2%, respectively. In terms of profits, lending is its biggest contributor followed by commerce. “We are still investing heavily into the commerce business as it continues to grow. We are also starting private labels in 17-18 products and investing in its distribution,” Mohapatra added.
OfBusiness currently has a profit-before-tax run-rate of under $30 million which is expected to increase to $60 million by FY22 on the back of planned expansion and acquisitions.
B2B Surge
While consumer internet firms continue to raise record capital from investors, B2B commerce platforms like OfBusiness, Infra.Market, Moglix and Zetwerk have also gained prominence over the last 12 months-both in operations and fund raising from marquee investors. These companies are not necessarily direct competitors.
“The 60 million SMEs in India are underserved by the existing offline supply and finance chain. OfBusiness has successfully built a full-stack solution enabling commerce and financing through a single marketplace which is digitising the SMEs. We have been impressed by the team’s market leadership, growth and focus on profitability and eager to be part of OfBusiness,” said Sumer Juneja, partner, SoftBank Investment Advisers.
The business-to-business(B2B) commerce platform is now the 18th Indian unicorn—startups valued over $ 1 billion—for the year, as record inflow of capital is pumped into the country’s startup economy.
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Mohapatra said he will use the new capital for acquisitions and strategic investments to gain greater control over the supply chain of its core segments like foodgrains, metals, plastics, petrochemicals, industrial chemicals, food grains and building materials.
“We have been profitable but (acquisitions) will increase our profit margins into double digits. We have reached a scale where we need meaningful control (over the supply chain),” he said.
Launched five years ago, OfBusiness is currently at a revenue run-rate of $1.1 billion, based on its July revenue. The company typically earns margins of 5-10% but (acquisitions) could help OfBusiness take margins up to the early teens and then near the 20% mark.
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“We are looking at companies that have revenue in the range of Rs 20-200 crore,” said CEO Mohapatra.
ET first reported about SoftBank’s potential investment in OfBusiness on June 2. So far this year, SoftBank has backed social commerce startup Meesho and banking technology platform Zeta, taking both to the unicorn club. ET reported last month that the Japanese tech investor is likely to double down on portfolio firms like SaaS (software-as-a-service) platform MindTickle with a new cash infusion at a valuation of over $1 billion.
Other Verticals
While the core business for OfBusiness is facilitating commerce, it also has a financing platform--Oxyzo--which is operated through its own non-banking financial company (NBFC) licence.
The lending vertical, the second largest business vertical, has a loan book of $220 million which is growing 80% annually. According to Mohapatra, it has seen non-performing assets (NPA) of less than 1%.
The company also has a SaaS vertical which helps SMEs with online procurement of various tenders in the manufacturing and infrastructure sectors--both Indian and global.
While commerce contributes 55% of its total net revenue, lending and SaaS have a pie of 43% and 2%, respectively. In terms of profits, lending is its biggest contributor followed by commerce. “We are still investing heavily into the commerce business as it continues to grow. We are also starting private labels in 17-18 products and investing in its distribution,” Mohapatra added.
OfBusiness currently has a profit-before-tax run-rate of under $30 million which is expected to increase to $60 million by FY22 on the back of planned expansion and acquisitions.
B2B Surge
While consumer internet firms continue to raise record capital from investors, B2B commerce platforms like OfBusiness, Infra.Market, Moglix and Zetwerk have also gained prominence over the last 12 months-both in operations and fund raising from marquee investors. These companies are not necessarily direct competitors.
“The 60 million SMEs in India are underserved by the existing offline supply and finance chain. OfBusiness has successfully built a full-stack solution enabling commerce and financing through a single marketplace which is digitising the SMEs. We have been impressed by the team’s market leadership, growth and focus on profitability and eager to be part of OfBusiness,” said Sumer Juneja, partner, SoftBank Investment Advisers.
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