Power2SME, a startup that aggregates raw material demands of small and medium sized enterprises and services, has raised $20 million in a fresh funding round from Nandan Nilekani, co-founder of Infosys, along with Accel Partners, Kalaari Capital and Inventus Capital Partners.
While the investment amount in this Series D round of funding has not be revealed officially by company or the investors, a report from Economic Times suggests that the amount is $20 million.
The company was founded by R Narayan in 2012. It sources raw material at competitive prices across categories such as chemicals, additives, inks, paints, metals, and polymers, to sell it to SMEs directly. It sources raw material from large vendors such as SAIL, Tata Steel, Essar Steel, GAIL, JSW, Haldia Petrochemicals, DuPont, Posco Steel and Apollo Pipes.
The company claims to have more than 30,000 SMEs on the platform and is currently focused on SME hubs of Gujarat, Maharashtra, West Bengal, Tamil Nadu and Delhi-NCR.
The Gurgaon-based company had previously raised $14.8 million from the same investors in around three funding rounds. In Series C round, the company had raised $6.8 million from Inventus and Kalaari. It expects to end this financial year with a massive revenue of well over Rs. 350 crore. Its revenue in 2014-15 stood at Rs. 130 crore.
According to Narayan, Power2SME could become a Rs. 8,000 crore company by 2020, and that would still be less than 1% of the market in manufacturing SMEs. He further stated that:
SMEs get 1.5% to 5% lower prices when they procure from Power2SME. Our average orders are between Rs 15 lakh and Rs 20 lakh. We want to break even in the next 8-10 months. We want to expand our vertical focus and add more products including rubber, alloys, copper, aluminium, paper products.
Nandan Nilekani, who invested in this startups, said,
SMEs need tech platforms and marketplaces. And Power2SME has a chance to scale and transform the sector. When SMEs go digital via portals like Power2SME, their data flow becomes visible and boosts their credit worthiness, and this makes it easier for SMEs on the platform to borrow from banks. There’s currently a lot of focus on B2C (business-to-consumer) investments. But such B2B (business-to-business) ventures that help to organize and boost the SME sector can make a huge difference.