OfBusiness, an online marketplace for Small-and-Medium (SME) commerce, has raised Rs 75 crore in its series B round of funding led by Zodius Capital, a growth-stage tech fund which has backed companies like Big Basket, Pepperfry and Zivame. This is the second fund-raise for the year-old startup at a time when investor confidence around capital-guzzling, high-burn consumer internet firms has waned considerably while sentiments around business-to-business ventures have become bullish. The freshly raised capital from Zodius, with participation from existing investors Matrix Partners and angels, is to help the Gurgaon-based firm roll out a financial services subsidiary for its SME clients.

OfBusiness is in the process of picking up a non-banking financial company licence along with tying up with other NBFCs, its Co-Founder & CEO Asish Mohapatra told. The Gurgaon-based firm started operations in January this year and caters to SME buyers across construction and manufacturing, selling raw materials like industrial steel, building materials and fabrication, along with construction consumables. It has in all raised Rs 110 crore across two financings rounds this year.

Some of the other funded players in the B2B commerce sector include Industry Buying, Power2SME, Moglix, and mSupply .com, among others.

“B2B businesses should not be built on deep discounting as SMEs value service. Important service metrics include price discovery , on-time delivery, access to financing options, which they would be willing to pay for as long as one is broadly competitive on pricing. We have enforced transaction level profitability and it has resulted in 3%-plus odd net contribution margins consistently for us,” Mohapatra said.

A former VC at Matrix Partners, Mohapatra founded OfBusiness along with five others – Bhuvan Gupta, who was VP of Engineering at Snapdeal, Ruchi Kalra, partner at McKinsey, besides Srinath Ramakkrushnan, ex-ITC, Nitin Jain and Chandranshu (the other co-founders at OfBusiness).

The online commerce platform is present across 10 of the 300 of the so-called SME clusters in the country. It claims to be dealing largely with big-ticket orders along with providing its own logistics to sellers on its platform. ” We are excited to invest in the B2B commerce sector where Ofbusiness has a unique ‘cluster-wise’ approach to servicing SME buyers and sellers,” said Gautam Patel, MD, Zodius.

The overall market for raw materials used in the construction and engineering sector is pegged roughy at $150 billion, which is what OfBusiness is looking to get a slice. The company said it saw a 20% rise in demand over the past month on the back of the government’s demonetization move as smaller businesses started transacting online. “The OfBusiness team has executed rapidly in a huge B2B market. The new round of funding will give further momentum to the credit marketplace as a big enabler of the business,” said Vikram Vaidyanathan, MD at Matrix Partners India.

Source: The Times of India