Power2SME closes $6M in Series B funding from Accel, Kalaari & Inventus Capital
Gurgaon-based BEBB India Pvt Ltd, which runs Power2SME, an online buying hub for small and medium enterprises (SMEs), disclosed that it had raised $6 million (Rs 35.7 crore) from existing investors in its Series B round of funding. Early-stage VC fund Accel Partners led the round, which also saw participation from Kalaari Capital and Inventus Capital. We wrote about the funding in April this year, but at that time, the exact amount raised was not divulged by the company.
The funding will be used to scale up the company's business by expanding its footprint to southern India, increasing its product portfolio and enhancing its technology & marketing initiatives. It will be also used to extend Power2SME's sourcing channels to facilitate direct imports for SME customers.
"We believe that the limited size and the inefficiency in negotiation capabilities hamper the ability of the SMEs to get optimum procurement prices. Power2SME enables the SMEs to source products at competitive pricing, thus ensuring significant savings. The Buying Club for SMEs' raw materials is a unique concept and we have not found a similar business model so far. Similar concepts are there globally but they focus on services, not physical goods. The business model of Power2SME sustains the ability to grow and expand with the ability to cater to SMEs across multiple sectors," said Mahendran Balachandran, partner at Accel Partners.
The company was founded by Narayan in January 2012, with a seed capital of Rs 2 crore, and it started operations in July that year. In October 2012, the company raised a Series A round worth Rs 10 crore from Inventus Capital Partners and Kalaari Capital (formerly Indo-US Venture Partners). According to Narayan, the company is currently clocking quarterly revenues run rate of over $2 million and has 13,000 registered SME users.
Power2SME operates like a buying club, offering information and tools that enable SMEs to reduce their procurement costs. It helps SMEs by eliminating the need to engage with multiple vendors, providing doorstep delivery of goods through logistics providers, offering flexible payment options and accepting orders online 24Ã—7. The company is currently catering to industries such as construction, manufacturing, precision engineering and automotive OEMs.
For revenue generation, the company buys products at a certain price from the suppliers and sells those to the SMEs by charging a bit more. For instance, if a product is priced at Rs 100, the company buys it at Rs 80 and sells it for Rs 83. This way, the SMEs are still getting a good deal on the products and the company also gains. Power2SME has SME clients with turnover ranging from Rs 5 crore to Rs 250 crore and works with established suppliers including Indian Oil, ArcelorMittal, SAIL, GAIL and Haldia Petrochemicals, among others.
In a conversation with Techcircle.in earlier this year, Narayan said that the company was looking to cross $1 billion in GMV in the next five years and aimed to achieve profitability by 2014.
(Edited by Sanghamitra Mandal)