India’s 2021 unicorn juggernaut shows no signs of slowing down.
OfBusiness, which is a platform for sourcing raw material and credit for small businesses, has become the latest Indian startup to enter the unicorn club. The company raised $160 million in a round led by Softbank Vision Fund, which valued the company at $1.5 billion. OfBusiness becomes the 18th Indian startup to attain the unicorn status this year.
“The 60 million SMEs in India are underserved by the existing offline supply and finance chain,” said Sumer Juneja, Partner at SoftBank Investment Advisers. “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,” he added.
OfBusiness had been founded in 2015 by Asish Mohapatra, Nitin Jain, Ruchi Kalra, Vasant Sridhar and Bhuvan Gupta. The founding team had degrees from IIT Kharagpur, IIT Delhi, BITS Pilani, FMS Delhi and other top institutions, and had work experience at Mckinsey, ITC and Royal Bank of Scotland. OfBusiness built a tech platform that facilitated raw material procurement and credit for small and medium enterprises, with a focus on the manufacturing and infrastructure sectors. OfBusiness helps these businesses procure materials like metals, chemicals, polymers, agri commodities, petrochemicals and building materials. The company also provides SMEs access to cash flow-based financing for buying raw materials.
The business is a money-spinner — OfBusiness is now at an annual revenue run rate of $1.1 billion. The company makes margins of between 5 and 10 percent on sales, but aims to increase it to 20%. “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),” said OfBusiness cofounder Ashish Mohapatra. OfBusiness plans to use its latest fundraise to acquire companies to get more control over the supply chain, and is looking to acquire companies with the revenue range of Rs. 20-200 crore.
OfBusiness has also managed to built a strong lending business for itself — while 55% of its revenue comes from sale of raw materials, 43% is contributed by lending, and another 2% by its SaaS offerings. The company has a loanbook of $220 million which it says is growing at 80% annually.
OfBusiness is yet another example of an Indian startup that’s managed to bring an offline process online, and made a lucrative business out of it. Unacademy, for instance has brought coaching classes and tuitions online, Pharmeasy has brought medicine shopping online, Groww has brought investing online, and Uber-for-trucks BlackBuck brought an industry as rooted in the physical world as trucking to the internet. OfBusines, for its part, has tapped into India’s growing economy, and built a tech-enabled platform to help small and medium businesses flourish. And as 2021’s unicorn glut with 18 new unicorn startups shows, India might’ve only scratched the surface of creating value in traditional businesses and processes through the use of technology.