Power2SME raises $10M from the private investment arm of World Bank
Gurgaon-based B2B online marketplace Power2SME raised $10 million from the International Finance Corporation (IFC), a member of the World Bank Group.
The five-year-old startup raised around $35 million in four earlier rounds from Kalaari Capital, Accel Partners, Inventus Capital, as well as Nandan Nilekani, who is also their strategic advisor.
Power2SME helps small and medium enterprises buy raw materials at bulk prices and get working capital without collateral. Started in 2012, the lending platform broke even in November 2016, and is now profitable. It recorded revenues of more than Rs 1,000 crore in the last fiscal.
A press statement said that IFC will also advise Power2SME to help expand its operations beyond the 14 states it's currently present in, improve its ability to provide working capital to SMEs by adding more banks as partners, and increase the number of users on its platform ten-fold in five years.
As the world's largest financial institution geared to the development of the private sector in emerging markets, IFC focuses on consumer internet, edutech, healthtech, cleantech, and B2B e-commerce. It has also invested close to $1 billion in financial intermediaries in India to enable credit financing for SMEs.
More than 40 per cent of the global economy is powered by SMEs. In India, around 17 per cent of the GDP is powered by the SME sector; manufacturing SMEs cover 7.5 per cent of the GDP. With the current government focusing on manufacturing, and addressing the industry’s needs through campaigns such as Make in India and Skill India, the sector is looking at a brighter future.
Also read: Manufacturing sector lowest paid with Rs.211.7 per hour
“IFC’s extensive experience in supporting the SME sector through financing and deep networks with banks and financial institutions will help us in our vision to make SMEs bankable,” said R Narayan, Founder and CEO, Power2SME.
“Indian SMEs are critical to making India a manufacturing hub and we must foster the sector if we are to meet the national imperative of inclusive growth. We aim to continue strengthening the SME ecosystem by addressing key challenges that are roadblocks to SME growth,” he added in the press statement.
India has the largest base of SMEs in the world after China. However, Indian SMEs contribute only 8-10 percent to the GDP, compared to 60 percent in China.
“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. By working with SME-focused companies and partner financial institutions, we aim to improve access to finance for more than one million SMEs in the next five years,” said Ruchira Shukla, Venture Capital and Private Equity Lead, IFC South Asia.