OfBusiness, a startup that lends to small and medium enterprises, has raised Rs 200 crore in a series C funding round from Creation Investments and Falcon Edge. Avendus Capital was the advisor for the current transaction.
Asish Mohapatra, chief executive officer of OfBusiness, said he would leverage the Rs 200 crore by four times to source funds from banks and other NBFCs for onward lending.
The funding round, which also saw participation from the companys existing investors Matrix Partners India and Zodius Capital, takes the total amount raised by the Gurgaon-headquartered company to Rs 500 crore, as a mixture of both debt and equity.
OfBusiness, which has extended loans to about 2,500 small enterprises working in the infrastructure and manufacturing sectors, also allows them to buy goods from the platform directly, thereby offering them loans as well as fulfilments. The total loanbook for OfBusiness stands at Rs 250 crore with a monthly disbursal of Rs 100cr.
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 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.
Mohapatra, former VC at Matrix Partners, set up the company three years ago with Bhuvan Gupta, ex-vice president of engineering at Snapdeal, and former McKinsey partner Ruchi Kalra.
With about 30% of the borrowing entities being in the infrastructure business with an annual turnover between Rs 5 crore and Rs 100 crore, OfBusiness has 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.
"Flow based lending captures transactions flows between small businesses, enabled by India Stack. With transactions of Rs 5 lakh to Rs 1 crore this is a huge opportunity. OfBusiness has a unique purchase financing model addressing this, and their proprietary data advantage is reflected in the increasing efficacy of underwriting and support from marquee banking partners," said Vikram Vaidyanathan,managing director at Matrix Partners India.
OfBusiness had first raised Rs 32 crore in January 2016 in a funding round led by Matrix, and then Rs 71 crore in 2017 in a series B funding round led by Zodius.
Mohapatra said OfBusiness is growing at 10-15% every year and has been profitable since December last year.