Ofbusiness - B2B sourcing & credit in India
Founded in 2015, Ofbusiness is a raw material aggregator and procurement finance provider.
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Founded in 2015, Haryana-headquartered Ofbusiness is a platform that facilitates raw material procurement and credit for SMEs in the manufacturing and infrastructure sectors. The platform brings in institutional credit, both secured and unsecured to SMEs at low cost and aggregates raw material sourcing, and passes on most of the aggregation benefits like volume discounts from manufacturers to the SMEs.
In 2021, Ofbusiness entered the unicorn club after raising $160M in a funding round led by Japan’s SoftBank Vision Fund-II. The company’s latest funding round was in December 2021 when it raised $325M in a Series G financing round bringing its total valuation to $5B.
The company is backed by notable investors like Tiger Global, Norwest Venture Partners, SoftBank Group, Matrix Partners, Falcon Edge Capital, Creation Investments and Zodius. It currently offers 100+ raw material product categories to over 700,000 registered SMEs and is serving more than 3000 SMEs by providing them with tailor-made financing solutions.
Business Overview & Products
OfBusiness offers raw materials in the following categories:
The company’s Oxyzo platform provides secured and unsecured credit up to $20M to SMEs belonging to manufacturing and infrastructure sectors that have an annual turnover of over $3M. It also has a government and private contracts portal called BidAssist, which makes searching for tenders simpler.
The company serves over 24 states in India, including cities like Gurugram, Mumbai, Bangalore, Hyderabad, Chennai, Pune, Chandigarh, Ahmedabad, Coimbatore, Jaipur, Indore, Tiruchirapalli, Vapi and is rapidly expanding to other states.
How It Works
Ofbusiness provides institutional credit (secured and unsecured) to SMEs by aggregating several raw materials, getting them financed by local distributors and financiers, and then passing the majority of the aggregation benefits, such as volume discounts from manufacturers, to the SME.
This process is called Purchase Financing and the company lets SMEs attain credit lines for a variety of raw materials such as industrial steel, electrical goods, cement, bulk polymers, chemicals, building materials, solar installations, and more. However, Ofbusiness has a selective lending approach thus it only lends to SMEs in manufacturing and infrastructure services. Based on their contracts, SMEs have repayment cycles that extend up to six months.
After a purchase financing limit has been sanctioned from the company, the SME places inquiries within the limit and uses it for purchasing raw materials from the platform. Ofbusiness then aggregates the selected raw materials that SMEs across clusters order directly to the manufacturer, generating channel efficiencies. Fulfillment of raw materials is done by using a bidding engine that helps buyers and suppliers get discovery and commercial benefits.
The company also leads acquisition online by capturing SMEs as they bid and win tenders (aided by Ofbusiness), which makes the marketing effort efficient in both cost and quality.
Underwriting of loans is done by not only evaluating the financial data of the SME, which at times is inadequate but also by several other alternate data sources of SME operations. These are contributed by the SME community of buyers and sellers.
Business Model & Pricing
Ofbusiness has a B2B business model which combines the power of commerce and finance to be both a raw material aggregator and procurement finance provider to its customers. While local lenders and traders offer loans at a cost of 24-48%, Ofbusiness offers loans up to $20M at 15-18%, making it an attractive option for SMEs.
The company’s major chunk of revenue of around 55% is generated through the sale of raw material, whereas 43% comes through lending and the remaining 2% by its SaaS offerings. However, when it comes to profits, lending is its biggest contributor followed by commerce. It makes margins between 5-10% on sales currently but aims to increase it to 20% by acquiring companies thus gaining more control over the supply chain.
Ofbusiness has been profitable since its inception. In 2021, the company witnessed a 72% jump in profit to $7M and a 2x growth in revenue from operations to $234M from $114M in the previous fiscal year. Currently, the company has reported an annual revenue run rate of $1.4B. It entered the unicorn club in 2021 after raising $160M in a funding round led by SoftBank Vision Fund-II. After its latest $325M funding round, the company is now valued at $5B. The company reported having over 700,000 registered SMEs on its platform, with their app downloaded more than 5000 times.
The company was reported to be doing over $120 Million in GMV as of December 2021.
Founder(s) & Team
Vasant Sridhar: CSO and Co-Founder at Ofbusiness. A graduate of IIT Madras, with a Bachelor’s Degree in IT Engineering, previously founded Bloodline, a mobile and web-based platform for patients, potential donors, and healthcare facilities.
Nitin Jain: Co-Founder at Ofbusiness. A graduate of IIT Delhi, with an M-Tech degree in Computer Science, he worked at the Royal Bank of Scotland before founding O’AgriFarm, an Agri financing and fulfillment platform where he’s currently the CEO.
Asish Mohapatra: CEO and Co-Founder at Ofbusiness. A graduate of the Indian School of Business, with an MBA he founded Oyxzo Financial Services, a platform that offers credit solutions to SMEs.
Bhuvan Gupta: A graduate of Birla Institute of Technology and Science, with a B.E degree, he was V.P Engineering for SnapDeal before co-founding Oyzco Financial Services with Ashish Mohaparta.
Ruchi Kalra: A graduate of the Indian School of Business with an MBA degree, she was a partner at McKinsey before co-founding Oyzco Financial Services with Bhuvan and Ashish.
History & Evolution
In 2015, Asish Mohapatra, Vasant Sridhar, Ruchi Kalra, Bhuvan Gupta, and Nitin Jain were looking to start a venture together that would solve India’s B2B problems. Even though B2C was experiencing a big wave at the time, they realized the way the B2B ecosystem was operating, there was no innovation, technology adoption, or efficiency in the ecosystem. This was a market gap they could benefit from. Hence, Ofbusiness was founded – a large B2B platform catering to small and medium enterprises across sectors like manufacturing and infrastructure.
In 2016, Ofbusiness got NBFC status and started providing loans to its customers by collaborating with other NBFCs. It also planned to set up a nonbanking finance company subsidiary that would map customer data, specific products for SMEs and lend to them. By that year it had served over 700 customers with a repeat rate of over 60%. It operated in Tamil Nadu, Andhra Pradesh, National Capital Region, Maharashtra, and Odisha with plans to expand to five more states, taking its presence to 30 clusters.
In 2017, Ofbusiness launched Bidassist.com, an SME business opportunity platform that aggregates new opportunities to enable discovery as well as makes recommendations for the SMEs based on their profile. Right after its launch, the platform was aggregating over 3,500 government tenders daily from across the country. That year it also received an NBFC license and launched OXYZO Financial Services to provide credit to its SME customers. The company also became part of The Smart CEO-Startup50 List for India.
In 2018, Ofbusiness stated that it had close to more than $14M in AUM and sports disbursals of over $14M. It also expanded to 13 states across India and was rapidly growing. In 2020, Ofbusiness’ credit rating was upgraded from BBB to BBB+ by ICRA and CARE. The company was also listed in Top Fintech Startups by Soonicorn Club, ranked 17th in Asia Pacific High Growth Companies list, and 5th in India’s Growth Champions list.
In 2021, Ofbusiness joined the unicorn club after raising $150M in a funding round led by SoftBank Vision Fund-II. The company was also recognized as one of India’s Growth Champions and its credit rating was upgraded from BBB+ to A by CRISIL Limited. It is now preparing for an IPO in the next two years and is in talks to raise a new round of funding at a valuation of over $4.5 billion. The startup is currently valued at $5B.
Ofbusiness has combined financing and fulfillment – two very different operating models through technology. This is the company’s competitive advantage. The multipurpose it serves to customers makes it stand out from the rest of its competitors. So does its strategy of selective lending, where the company only lends to SMEs belonging to the manufacturing and infrastructure industry that have an annual turnover of over $3M.
The company is planning to file papers for an IPO by 2022 and is eyeing a domestic listing. According to co-founder and CEO Asish Mohapatra, Ofbusiness will be appointing investment bankers by March-June 2022.
Ofbusiness’s SaaS offering for marketing, Bidassist has become India’s largest and most engaged scale platform for SMBs interested in revenue opportunities in the public sector domain. In such a short span of time, it has grown to 2.7 million unique users.
Indian financial services were estimated to be worth around $500B in 2021 with the fintech market being valued at around $31B.
India also has the highest fintech adoption rate globally at 87% while the average rate stands at 64%.
Suggested starting points to dive deeper
India's OfBusiness in talks to raise new funds at over $4.5 billion valuation (Manish Singh, TedCrunch, October 22, 2021)
OfBusiness was the only woman led startup that entered the unicorn club this year (Kritti Bhalla, Business Insider India, September 27, 2021)
Can OfBusiness help SMB's get Supply Smarter? (A Junior VC, September 19, 2021)
OfBusiness On The Turning Point That Paved The Way To Become Unicorn (S Shanti, Entrepreneur Europe, August 25, 2021)
From Incredulous To Incredible: How OfBusiness Turned Into A Profitable Unicorn (Rajiv Singh, Forbes India, August 3, 2021)
Press and News (ETPrime, August 22, 2019