Interview

OfBusiness helping SMEs to get financial support

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OfBusiness was incorporated in August 2015 with a Seed/ Series A funding of $ 5 million from Matrix and few angels. Their focus since start has been on traditional sectors as manufacturing and infrastructure which are behemoth sectors core to the economy, says Piyush Upadhyay, Head – Marketing and Growth, OfBusiness in conversation with Elets News Network (ENN). 

Give us an overview of OfBusiness.

Designed for the Indian SMEs, OfBusiness is a first-of-its-kind technology-driven SME financing platform with a product fulfilment engine. OfBusiness brings SMEs further into the financial mainstream by providing “purchase financing” of raw materials, which is 60-70 per cent of the SME’s total cost. OfBusiness is beneficial to SMEs in two ways –

1) it brings institutional credit (both secured and unsecured) to SMEs, which hitherto gets financed by local distributors and financiers at a much higher cost at 2%+ per month and,

ii) it aggregates several raw materials, and passes most of the aggregation benefits (like volume discounts from manufacturers to the SME.

Combining financing and fulfilment, two very different operating models, is done by Ofbusiness seamlessly through technology.

  1. OfBusiness has built flexible financing products aligned to SMEs’ cash flow cycles for traditional sectors as manufacturing and infrastructure enabling access to institutional credit (both secured and unsecured) as an alternate to financing by local distributors and financiers, which is at a much higher cost to the SME.
  2. Using the bidding engine, OfBusiness aggregates several raw materials and passes most of the aggregation benefits (like volume discounts from manufacturers) to the SME. By providing “purchase financing”, OfBusiness ensures rotation and on-demand use of the credit line ensuring higher quality of its book.
  3. Underwriting of loans by OfBusiness is done by not only evaluating the financial data of the SME, which at times is woefully inadequate, but also several other alternate data sources of SME operations, which are contributed by the SME community of buyers and sellers.
  4. BidAssist.com: OfBusiness also helps SMEs find new business opportunities through Tender information packets and in parallel collecting operational information for underwriting.

OfBusiness was incorporated in August 2015 with a Seed/ Series A funding of $5 Million from Matrix and few angels. Series B of around $ 11 million 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.

Name some of the SMEs your company is associated with and how you are helping them?

OfBusiness serves customers across Manufacturing (auto, capital goods, power, small machinery, solar, etc.) and Infrastructure services. With focus on SMEs in the core sectors of the economy, OfBusiness goes deep into a cluster to build tailored financial products to assist SMEs with growth and cost savings. Some examples include the following

  • Faridabad Cluster: Helping auto-oriented fabrication and machining SMEs like Yuva, Shakti auto components and Shree Anand for financing of and bringing down the cost of raw material purchases like Aluminum and Steel.
  • Trichy Cluster: Helping the BHEL Trichy vendor base (e.g., Rockfort, Mantek and Bhuvneshwari) engaged in heavy material fabrication in exploring alternate venues for  structural procurement like Raipur to help in better availability and financing the working capital finance for them.
  • Bhiwadi Cluster: Helping capital goods manufacturers (e.g., Himskaf and Skanda) procure newer orders from blue chip anchors by financing their raw material and consumables purchases.
  • Ghaziabad Cluster: Helping central agency (e.g., NHAI and NBCC) contractors like Kashyapi and Anurag to discover raw material vendors in newer states of operation (Kerala and MP respectively) while financing them as well.

How do you acquire raw materials for SMEs at the best price?

OfBusiness aggregates several raw materials and places orders directly on manufacturers. Aggregating volumes and disintermediation generates benefits (like volume discounts from manufacturers), bulk of which are passed by OfBusiness to its SMEs.

On receiving an RFQ from an SME which has a credit limit, OfBusiness sends across the request to multiple suppliers matching the requirement. The suppliers bid on its bidding engine to get the best price for the SME. Going deep into a cluster coupled with the bidding approach enables OfBusiness to provide the right material, at the best price within the promised time. By providing “purchase financing”, OfBusiness ensures rotation and on-demand use of the credit line ensuring higher quality of its book.

What are your next projects and plans?

OfBusiness follows a cluster based approach to its business building. The Company lends and fulfils requirements only in clusters with deep understanding and physical presence. The in-house technology platform – sales, operations and underwriting – ensures replicating the model across clusters across the country seamlessly. OfBusiness is currently in 22 clusters and on path to 33 clusters by end of the financial year and then 75 clusters by next financial year. Along with purchase financing, OfBusiness plans to launch products as bill discounting and capex financing aiming for annual transaction flow of Rs 2500 Cr in next financial year.

In line with its vision to ‘Spur Small and Medium to Huge’, OfBusiness has recently launched BidAssist, a free of cost, revolutionary platform that not only aggregates new opportunities to enable discovery but also makes recommendations for the SMEs based on their profile. BidAssist currently aggregates over 4000 government tenders daily from over 6000 public sources and over 500 government authorities. The platform’s unique approach makes the exhaustive task of searching and bidding for tenders relatively easy, expectedly saving up to 50 percent of the overall time spent earlier in this task.

The team is now working on adding advanced machine learning based intelligence to further recommend as per SME’s profile and assign a ‘probability to win’ against each opportunity. This will allow SMEs to operate more efficiently by focusing on opportunities that they are more likely to win, thus securing maximum business with minimal effort for a higher growth trajectory. The platform’s end-to-end services can be availed via anytime anywhere via its Android app and website, www.bidassist.com

What are your expectations from the government?

Our Government firmly believes that transparency and accountability are the two cornerstones of any pro-people government. Transparency and accountability not only connect the people closer to the government but also make them equal and integral part of the decision making process.

In the same spirit, Bidassist is focused on helping SMEs discover new opportunities by making it easy for the SMEs to understand the tender and bid for it. Bidassist is strongly focused on putting “probability to win” tag to each tender and bringing up select tenders which the SME must bid basis its past experience, areas of comfort etc.

Government has been gearing up for strong infrastructure push. While digital platforms allow for opportunity discovery but the reality is that SMEs still bid for contract within their comfort zones, making the bidding process only semi-open.

While we build the technology, we request government to mandate tender result declaration along with bidder information on various central & state government websites as soon as bids are open. Trend analysis on this data will help analyse the truly transparent geographies & clusters. Those clusters witnessing significant addition of new bidders & contract winners will be true reflection of open competition. Increased competition will result in increasing efficiency and better deliveries. Bidassist is committed to work with the government in building any tech platform which can help enable this.

 

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