Power2SME raises $36M in Series E from existing investors

Gurgaon-based B2B online marketplace Power2SME today announced raising $36 million in Series E funding from existing investors Inventus Capital Partners, Accel, Kalaari Capital, Nandan Nilekani, and International Finance Corporation (IFC), a member of the World Bank Group.

A press statement has said that Power2SME will use the funds to continue its geo-expansion, accelerate product growth and innovation, invest in additional sales and marketing resources, and continue evaluating strategic acquisition opportunities.

Just two weeks ago, Power2SME had announced raising $10 million from IFC. The five-year-old startup had raised around $35 million in four earlier rounds.

Empowering SMEs

The implementation of GST is expected to enable expansion of Power2SME into non-operational markets. The company claims that it will increase the number of transacting SMEs on its platforms by up to 10 times in the next five years.

R Narayan, Founder and CEO, Power2SME, said in the release: “Power2SME’s goal is to empower SMEs to reach efficiency of scale, thus driving profitability for them. This capital gives us additional resources to expand quickly and strategically into new markets, innovate rapidly, and deliver on our vision.”

Micro, small, and medium enterprises form a large part of the Indian economy, accounting for 45 percent of the country’s industrial output and 40 percent of its exports. Bank loans are not enough to make up for the fund shortage in the industry. Some estimates put the gap at $320 billion against a total of demand of $500 billion.

“In 2012, we invested in Power2SME because we believed in the SME growth story,” said Vani Kola, MD, Kalaari Capital. “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. For India, SME growth and empowerment will help in bringing up the GDP contribution of the sector to the nation and Power2SME is leading this change from the front. We are committed to helping the team become the dominant player in this market.”

Huge market 

Although India has the world's largest SME base after China, Indian SMEs contribute only eight–10 percent to the nation's GDP as compared to the 60 percent contribution by SMEs in China. However, with the Make in India initiative, SMEs are looking at a vibrant future.

Power2SME helps small and medium enterprises buy raw materials (such as steel, polymers, yarns, chemicals, etc.) at bulk prices and get working capital without collateral. Its platform FinanSME.com connects empanelled lenders with SMEs in order to provide working capital finance at better terms from banks and non-banking financial institutions for purchases on Power2SME. A third arm, SMEShops.com, addresses the growing and frequent requirements of SME buyers for consumable industrial goods.

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 and claims to have had 2.6x annual growth.