Tiger Global backs India’s OfBusiness at $3 billion valuation – ProWellTech

OfBusiness, a commerce startup that sells industrial goods and provides small businesses with credit, has doubled its valuation in less than two months to $3 billion, a top executive told ProWellTech.

Tiger Global led the six year-old startup’s $207 million Series F round, and SoftBank and Alpha Wave participated in it, OfBusiness co-founder and chief executive Asish Mohapatra told us. The new investment comes just two months after SoftBank led a $160 million round in OfBusiness at a $1.5 billion valuation.

Thursday’s announcement is the third financing round for OfBusiness this year. The startup, whose business has grown multiple folds this year, was valued at $800 million in April this year.

OfBusiness operates as a raw material aggregator and procurement finance provider. The startup works with banks to offer credit lines to small and medium enterprises that have an annual turnover of over $3 million.

The platform collects data on user activity that it relies on to underwrite loans to businesses that are using the OfBusiness platform for sourcing raw material and tenders. “This enables us to move from collateral based loans to cash-flow/ transaction-based lending – a key differentiator to banks,” Mohapatra told Bernstein analysts last year.

“The SMEs pay interest on their working capital loan (issued in form of card limits), and a margin on the raw material procured. Bid-Assist platform is a repository for SMEs to look up tenders suitable for their business. The tender sourcing and raw material margin provide better monetization and more importantly, predictive data useful for underwriting.”

The startup’s revenue run-rate is over $1 billion, and it’s profitable. By July this year, its loan book size had increased to $220 million.

“We provide credit lines, akin to cash-credit/ overdraft. Borrowers pay interest only on the limits drawn and are required to procure raw material from the platform. This provides us with a view on end-use of the loan and data for fresh underwriting and monitoring. Borrowers using leverage for inventory are better than those using loans to pay off old loans.”

The startup plans to deploy the fresh funds to expand its operations in India. OfBusiness is also eyeing merger and acquisitions opportunities, the startup said.

OfBusiness is Tiger Global’s latest investment in India. The New York-headquartered firm has backed nearly two dozen startups in the country this year, including Apna, BharatPe, Gupshup, DealShare, Classplus, Urban Company, CoinSwitch Kuber and Groww.