SME lending startup OfBusiness has raised ₹200 crores ($29.2 million) in series C funding led by Creation Investments and Falcon Edge. Existing investors including Matrix Partners India and Zodius Capital also took part in this funding round. Overall, the startup has raised ₹500 crores as a combination of debt and equity.
Asish Mohapatra, Chief Executive Officer at OfBusiness, said he would leverage the Rs 200 crore by four times to source funds from banks and other NBFCs for onward lending.
OfBusiness provides a technology-driven platform for SMEs to secure lending at nominal rates, along with providing value-added services like raw material procurement to help drive their business. It was founded by Asish Mohapatra, former VC at Matrix Partners, Bhuvan Gupta, ex-vice president of engineering at Snapdeal, along with former McKinsey partner Ruchi Kalra in 2015.
“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.”
The startup has claimed to have disbursed loans to about 2,500 small enterprises in the infrastructure and manufacturing sector. Of all the borrowers, over 30% come from the infrastructure space and more than 60% loans disbursed so far has been collateral free. For collaterals, the startup relies on bank guarantees or letter of credit from lenders.
The interest rates charged remain around 1.5% per month, thanks to the value services like raw material fulfillment provided to the borrowing enterprises. OfBusiness has been able to restrict bad loans to around 0.5%. The total loan book of OfBusiness stands at ₹250 crores with a monthly disbursal of ₹100 crores.
According to a report by Crisil, SME lending market was worth ₹20 lakh crores ($300 billion) in 2016 and is expected to grow at 11% till 2019. Lending space has many established players, some of these providing competition to OfBusiness are Capital Float, LendingKart, Quikrupee, SMEcorner, Innoviti, and Biz2credit among many others.