Matrix Partners-backed digital SME lender OfBusiness raises $29 mn

OFB Tech Pvt. Ltd, which operates fin-tech platform OfBusiness, has secured $29 million (Rs 200 crore) in a Series C round of funding led by two new US-based investors.

Impact investment firm Creation Investments and hedge fund Falcon Edge led the round, the Gurugram-based online lender said in a statement on Wednesday. Existing investors Matrix Partners India and Zodius Capital also participated in the round.

The Series C round takes the total the company has raised so far in equity and debt funding to Rs 500 crore.

In October last year, OfBusiness had raised Rs 25 crore in debt funding from Kotak Mahindra Bank.

It had raised its Series A funding of $5 million (Rs 34.2 crore) in early 2016 from Matrix Partners and a host of angel investors. In December 2016, it had secured $11.1 million (Rs 75 crore) in a Series B round from Zodius Technology Opportunities Fund and existing investors.

OfBusiness, which provides financing to small and medium enterprises, said it will use the fresh capital to grow its operations and scale its “profitable model”.

“We are great believers in the potential of SME lending in India towards the core sectors of the economy including manufacturing and infrastructure that have high dependence on traders and distributors for working capital,” said Asish Mohapatra, co-founder and chief executive, OfBusiness.

Vikram Vaidyanathan, managing director at Matrix India, said OfBusiness meets the SMEs’ need for financing repetitive purchases. “Their proprietary data advantage is reflected in the increasing efficacy of underwriting and support from marquee banking partners,” he said.

Tyler Day, director at Creation Investments, said OfBusiness has built a suite of financing solutions for SMEs in the manufacturing and infrastructure sectors, segments largely underserved by banks and traditional non-bank lenders. “The scale and profitability that OfBusiness has achieved in such a short time is both a testament to the company’s innovative products and the untapped potential of the SME sector in India,” Day said.

OfBusiness was founded in 2015 by Mohapatra, Bhuvan Gupta, Ruchi Kalra, Srinath Ramakkrushnan, Nitin Jain, Chandranshu and Biswajit Mishra.

It offers a single-window platform to provide secured and unsecured credit to SMEs for procuring raw material. The loan amount is credited directly to the suppliers after the raw material reaches the borrowers.

The company extends credit of up to Rs 2 crore to SMEs with an average annual turnover of Rs 20 crore, at 18%. It takes a 1% loan processing fee. Combined with discounted rates, it claims it earns 24-25% on its loan offerings.

Mumbai-based investment bank Avendus Capital was the exclusive adviser for the Series C funding.