Power2SME raises $36 million from Inventus Capital, others
New Delhi: Power2SME, a platform that services the raw material needs of small and medium enterprises (SMEs) in the manufacturing sector, has raised $36 million from its investors Inventus Capital Partners, Accel, Kalaari Capital, International Finance Corp. (IFC) and Infosys chairman Nandan Nilekani, the company said on Tuesday.
IFC, a unit of the World Bank, has joined as the new investor in this round. This marks the fifth round of institutional funding for the six-year-old company.
Power2SME aggregates demand from SMEs and procures raw material such as steel, polymers and chemicals, among other industrial inputs, from large suppliers at competitive prices. The company has two other business units—FinanSME.com, which helps companies secure loans, and SMEshops.com for industrial goods such as drills and measurement instruments.
In an interview, founder and chief executive R. Narayan said the funds will be invested in technology, sales and marketing, and geographic expansion. A part of the capital may also be used for strategic acquisitions.
The main focus will be to scale operations. “In 2018-19, we would aim to come close to Rs2,500 crore sales. In terms of people, we should be at 300 people, currently we are 230,” Narayan said.
Founded in 2012, Power2SME has grown swiftly over the past few years. It recorded sales of Rs340 crore in 2015-16 and Rs870 crore in 2016-17, Narayan said, adding that about 300,000 tonnes of steel, its biggest-selling commodity, was sold on the platform over the last 12 months. The company was operationally profitable in November 2016.
“In 2012, we invested in Power2SME because we believed in SME growth story,” said Kalaari Capital managing director Vani Kola. “Since then, Power2SME has shown proof of concept of its procurement offering as well as its finance offering and has emerged as a leader in its category.”
Gurugram-based Power2SME has seven offices servicing customers in 14 Indian states. About 50,000 SMEs are registered as its customers. These are usually small manufacturers located typically around major national highways and industrial clusters.
As business-to-business commerce predominantly runs on credit, Power2SME fixes this piece through FinanSME. The unit screens customers using its proprietary KYC (know your customer) process, and connects them to partnering banks that may be best suited to offer loans to a group of borrowers.
“Our investment in Power2SME will spur greater VC interest in the SME sector in the country and support India’s vision to become a global manufacturing hub,” said Ruchira Shukla, South Asia regional lead for venture capital at IFC. “By working with SME-focused companies and partner financial institutions, we aim to improve access to finance for over 1 million SMEs in the next five years.”