Fintech India: OfBusiness

OfBusiness is a technology-driven SME financing platform that adds value beyond financing through its raw material fulfilment engine and marketing services. OfBusiness serves as a single-window for SMEs in the manufacturing and infrastructure space to get secured and unsecured credit lines as an alternate to financing by local distributors and financiers, which is at a much higher cost. SMEs can use this limit for cost-effective procurement of raw material (metals, polymers, paper, building materials) which the platform aggregates, passing the aggregation benefits to the SMEs.

This interview is part of the Fintech India series.

Combining financing and fulfilment, two very different operating models, is done by OfBusiness seamlessly through in-house technology. Underwriting of loans by OfBusiness is done by not only evaluating the financial data, but also several other alternate data sources of SME operations, which are contributed by the SME community of buyers and sellers. By providing ‘purchase financing’ along with fulfilment, OfBusiness guarantees end use of the credit lines, which ensures a best in class business yield and quality of its book. Additionally, the platform also helps the SMEs to find new business opportunities through Tender information packets and in parallel collecting operational information for underwriting.

Asish Mohapatra is the co-founder and CEO of OfBusiness, a first-of-its-kind SME financing and product fulfilment platform. Prior to OfBusiness, Asish has extensive strategic and operational experience as a VC with Matrix Partners, Engagement Manager at McKinsey and Operations Manager turning-around an under-performing ITC subsidiary. Asish embarked on his entrepreneurial stint with the inception of OfBusiness in 2015, which has done an aggregate business of INR 400 Crores with an AuM of 100 Cr within a year and half of its launch. Asish is an IIT Kharagpur and ISB Hyderabad alumnus.

How did you come about setting your focus on this particular category? Please tell us a little more about the company’s beginnings as well.

OfBusiness was incorporated in August 2015 and 8 people who share the co-founder position including myself, Ruchi Kalra (IIT, ISB, McKinsey Partner), Bhuvan Gupta (BITS Pilani, FMS, Airtel-BSB, Snapdeal), Chandranshu (IIT KGP, Dev Factory, Trilogy), Nitin Jain (IIT Delhi, RBS London), Vasant Sridhar (IIT Madras, ITC), Biswajit (CA, Duet Hotels, DLF Hilton), Dhaval Radia (CA, Religare, Kotak, GE). The team came together in year-end 2015 and started with a Seed/ Series A funding of USD5M from Matrix and few angels. Series B of around USD 11mn with Zodius and Matrix happened in Nov 2016.

All the founders being on the right side of 30s, with significant prior experience, united to build something meaningful in the B2B space. As each of us had some experience to the SME world, we understood the over-dependence of the SME on the local dealer for both material and credit. Our focus since start has been on traditional sectors as manufacturing and infrastructure which are behemoth sectors core to the economy and where-in many members of the founding team had hands-on experience.

We started our journey focusing on a few geographic clusters (NCR and Trichy) finding a solution to the raw material aggregation and credit in parallel. As we developed deeper insights into the SME working capital cycles, the bundled solution of flexible purchase financing and lower cost of raw materials emerged. As the network grows the value addition potential of platform increases manifold.

What transformations have you undergone as a company since starting up?

Though OfBusiness very quickly established itself as a strong B2B material aggregation platform in the manufacturing and infrastructure with credit being provided through NBFC partners, we decided in early August 2016, to acquire our own NBFC license, build flexible products, and build our own book. This has enabled a better proposition to the customer.

Thoughts on the present Indian fintech landscape? How does it compare to the rest of the fintech majors in the world like Hong Kong, Singapore, United Kingdom, Sweden, etc. according to you? 

Fintech sector has brought the much-needed innovation in the Financial Services sector but there is still a long way to go compared to the global counter parts. Many fintech start-ups have shown a marked leap on efficient processing, unconventional data aggregation and underwriting approaches, non-traditional partner led acquisition, innovative business models on lending and payments. Incumbent Financial services players – banks and NBFCs – are getting inspired and partnering with the new age players for lending, data-analytics, payment solutions which is benefiting the end-user across better access to capital, experience and tailored offerings.

Which are the sectors in Indian fintech where you think there are untapped opportunities? How does it fit in with your product and growth plans for the immediate future?

India has large opportunity pockets including, un-banked population, wealth management for affluent and mass affluent class, business / personal loans for starting up micro-enterprises and business loans for the SME sector.

OfBusiness focuses on SMEs in core sectors which is a capital-intensive domain, and often on the receiving end of a working capital crunch due to several reasons. They need capital influxes to trigger growth initiatives, utilize capacity to full, and manage corporate receivable cycles. Their limited buying power also means that there are fewer creditors willing to extend working capital for SME businesses, and if they do, it comes at a prohibitive cost. Further, GST has brought a level operating field for SMEs to grow beyond the earlier limiting geographic boundaries for which they need growth capital.

Please tell us a little about your funding journey – the requirements & objectives in mind when you decided to raise a round/s; the fit you found or were looking for with your investors; what would you be looking for in the future as the business grows?

OfBusiness raised a Series A of US$ 5M at the inception stage in Jan 2016 from Matrix Partners and a host of angels, which includes several angels of India’s new age tech revolution. A year later, in Jan 2017, it raised a US$ 11M Series B from Zodius Technologies, with participation from the previous investors. We now intend to raise a US$ 25-30M in coming 6 months and are looking for partners with financial services experience and interest. Going forward, we aim to reach double the book size by end of the financial year maintaining an NPA of <1% doubling the leverage.

What advice would you give to other fintech entrepreneurs?

Lending alone will be commodity, think about adding value. In our experience, there is huge value in building a network and innovating on financial products. Also, growth should never be at the cost of asset quality, which starts at the time of lending decision.

Source:  http://www.fintechasia.net/fintech-india-ofbusiness/