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Power2SME secures Series E funding of $36M from IFC and existing investors

Power2SME, an online marketplace for small and medium enterprises engaged in manufacturing, has secured Series E funding of $36 million from existing investors Inventus Capital Partners, Accel, Kalaari Capital and Nandan Nilekani, with participation from its latest investor International Finance Corporation (IFC), the investing arm of the World Bank Group.

This funding comes two weeks after the startup raised $10 million as an equity investment from IFC. The company will use the fresh capital for geographical expansion, accelerating product growth and innovation, and further invest in additional sales and marketing resources, and continue evaluating strategic acquisition opportunities.

Currently, the e-commerce player has operations in 14 states, and claims to have a registered SME base of 50,000 SMEs. Power2SME claims that it is registering year-on-year growth of 2.6 times. It also said that the startup achieved profitability in November 2016.

Power2SME enables SMEs to companies buy raw materials such as steel, polymer, chemicals, yarn etc at bulk prices and get working capital without collateral.  The company has three platforms addressing challenges in raw material procurement, finance, and maintenance, repair and operations (MRO) needs. Besides Power2SME, it has FinanSME which connects lenders with SMEs in order to provide working capital finance at better terms from banks and non-banking financial institutions for purchases on Power2SME, and SMEShops allows SMEs to buy consumable industrial goods.

According Power2SME’s data, Micro, small and medium enterprises (MSMEs) accounts for 45 percent of the country’s industrial output and 40 percent of its exports. It also say that there is critical shortage of long-term funding for the sector, and some estimates put the gap at $320 billion against a total of demand of $500 billion.

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Power2SME’s Previous funding

  • Before IFC’s backing this month, Nandan Nilekani had joined Power2SME as a strategic advisor through his investment in late 2015. 
  • In September 2014 , the company had raised Rs 42 crore in Series C funding from Inventus Capital, Kalaari Capital and Accel Partners.
  • Prior to this, Power2SME had raised $6 million from Accel Partners in April 2013.
  • Before that, it secured an undisclosed amount of Series A investment from Kalaari Capital in December 2012 and Rs 10 crore investment from Inventus Capital Partners in September 2012.

Competition

Power2SME competes with Moglix, Udaan, Amazon, Industrybuying, OfBusiness, Indiamart’s Tolexo, Walmart etc.

  • Moglix raised $12 million from IFC and other investors in July this year. Note IFC is a common investor in Moglix and Power2SME.
  • Udaan.com, a B2B marketplace founded by former Flipkart CTO Amod Malviya, had raised series A funding of $10 million last year.
  • Another online marketplace for industrial supplies and goods, Industrybuying raised Rs 12 crore in a round of funding from Trifecta Capital in January last year. Industrybuying is funded by Trifecta Capital, SAIF Partners, Kalaari Capital, the TVS Group and the Murugappa Group. It also raised an undisclosed amount of funding from TVS Group and Murugappa Group. It had also raised $2 million from SAIF Partners in February last year.
  • Gurgaon-based OfBusiness is also an online marketplace for business-to-business commerce, which raised $5 million in a Series-A funding round led by Matrix Partners India, in February last year, which was followed by $11 million from Zodius Technology Opportunities Fund, and  existing investors.

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Writes about e-commerce, social media, tech and Internet ecosystem.

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