How Ofbusiness went small to build a full-stack B2B marketplace

There are two prominent routes to scaling up a startup. The first is to disrupt a massive business category with tons of capital. The second is to target a niche category and offer a comprehensive range of services catering to all major requirements. Ofbusiness has adopted the latter approach.

In the traditional supply chain network for small and medium enterprises, the company is establishing itself as a digital aggregator helping companies get new business, procure raw materials, fulfil orders, and even secure financing. 

And at a time when digital lending startups are fighting a battle for survival, the 6-year-old startup positioned working capital loans as a cornerstone of its business as it marched into the Unicorn club.

Ofbusiness recently raised $160 million from SoftBank and existing investors at a valuation close to $1.5 billion. That’s nearly double the $800 million the company had been valued at in March when it raised $110 million from Falcon Edge Capital. And over three times its $431 million valuation earlier this year. In all, Ofbusiness has raised around $340 million so far.

It is now in talks with Tiger Global Management for another $200 million in a funding round that could boost its valuation to $3 billion, according to two sources familiar with the discussions. The latest funding talks were first reported by Moneycontrol. 

Ofbusiness is a major B2B marketplace with a sharp focus on credit. It is not seeking to change how Indians borrow. Rather, it has built specialization in one sector and is getting deeper into it, said the founder of a fintech lending startup also focused on small and medium businesses.

Asish Mohapatra, cofounder of Ofbusiness, which was incorporated in August 2015, is mainly targeting manufacturing industries, among the most traditional business segments in the country. This is a tough sector to crack but Ofbusiness has been able to find some success. 

The startup reported a net profit of Rs 40 crore for the first three quarters of financial year 2020-2021, show numbers sourced from rating agency Crisil. For all of FY 2020, it had registered a profit of Rs 32 crore. The company’s financials for FY 2021 aren’t available yet.

At a group level, the assets on its book increased to Rs 1,952 crore in  December from Rs 1,445 crore in March last year. 

“It is an ecosystem approach to lending that has helped us scale up in a tough pandemic year,” said Mohapatra, speaking with The CapTable from Delhi.