Ofbusiness enters the unicorn club after raising $160 million

Ofbusiness, a Gurugram-based B2B startup, has joined the unicorn club after raising a $160 million round led by SoftBank's Vision Fund 2.

The existing investor Falcon Edge Capital also participated in the round. While SoftBank contributed $150 million to OfBusiness in this round, Falcon Edge Capital and Matrix Partners contributed the rest. Falcon Edge previously led a $110 million financing round in April, when OfBusiness was valued at $800 million.

The funding was raised at a valuation of nearly $1.5 billion. Following automobile marketplace Droom and online trucking platform BlackBuck, it is the 18th Indian startup to become a unicorn this year.

The new raised amount will be used in acquisitions and strategic investments to gain greater control over the supply chain of its core segments like foodgrains, metals, plastics, petrochemicals, industrial chemicals, food grains, and building materials, stated its co-founder and chief executive, Asish Mohapatra.

“We have been profitable but (acquisitions) will increase our profit margins into double digits. We have reached a scale where we need meaningful control (over the supply chain),” he said.

Asish Mohapatra, who previously worked with Matrix Partners India, former McKinsey & Company partner Ruchi Kalra, Bhuvan Gupta, who previously worked at Snapdeal, and Nitin Jain, an IIT-Delhi graduate, among others, founded the startup in 2015.

OfBusiness, has a revenue run-rate of $1.1 billion as of July. The company typically earns margins of 5-10%, and acquisitions will help OfBusiness increase margins close to the 20% mark.

Although OfBusiness's core business is commerce facilitation, it also has a financing platform, Oxyzo, that is run through its own non-banking financial company (NBFC) license.

The company also has a SaaS vertical that assists SMEs with online procurement of various tenders in the Indian and global manufacturing and infrastructure sectors.

The commerce sector accounts for 55% of total net revenue, while lending and SaaS account for 43% and 2%, respectively. Lending is the largest contributor to profits, followed by commerce.

“We are still investing heavily into the commerce business as it continues to grow. We are also starting private labels in 17-18 products and investing in its distribution,” Mohapatra added.

OfBusiness currently runs a profit-before-tax run-rate below $30 million, which is expected to rise to $60 million by FY22 due to planned expansion and acquisitions.

Excluding the current round, it had raised a total of $193.1 million from investors including Norwest Venture Partners, Innoven Capital, and Zodius Capital, according to data platform Crunchbase.

SoftBank's Vision Fund 2 has made its latest investment in India with OfBusiness. The fund led a $250 million equity funding round in banking technology startup Zeta late last month. This increased the startup's valuation to $1.45 billion, led by Bhavin Turakhia. The fund's other Indian investments include social commerce platform Meesho, eyewear brand Lenskart, and edtech firm Unacademy.

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