Power2SME raises under $7M in Series C from Accel, Kalaari & Inventus
Gurgaon-based BEBB India Pvt Ltd, which runs Power2SME, an online buying hub for small and medium enterprises (SMEs), has raised Rs 42 crore ($6.87 million) from existing investors in its Series C round of funding. These included early-stage venture capital fund Accel Partners, Kalaari Capital (formerly Indo-US Venture Partners) and Inventus Capital.
The funds will be invested in further expanding the company's business across the country. It will also enable Power2SME to reach out to more SMEs, enhance its product portfolio, diversify its sourcing channels and increase focus on imports.
The new round takes the total funding raised by Power2SME to date to Rs 87 crore.
The company was founded by R 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. Post that, it raised $6 million (Rs 35,7 crore) in its Series B round of funding from existing investors Inventus and Kalaari, and from Accel in April last year.
"The decision of all three investors to reinvest in our business is a testimony of the fact that they have huge confidence in the success and scalability of our business model. The Series C funding will give a huge impetus to further strengthen our foothold in the Indian MSME industry," said R Narayan, founder and CEO, Power2SME.
"The SME industry is the mainstay of the Indian economy. Power2SME is first of its kind company that is committed to raw material procurement, strictly for the MSME industry. Over the past couple of years, they have been able to connect with over 25,000 SMEs and redefine raw material procurement for their organisations," added Vani Kola, MD, Kalaari Capital.
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.
"We have been following the growth story of Power2SME since the first time we decided to invest in it, and we believe that the company will be one of the big success stories in the times to come, owing to its innovative business model," said Mahendran Balachandran from Accel Partners.
"The fact that SMEs are operating on low margins and raw materials procurement- which is close to 65-70 per cent of the cost of goods sold- continues to be one of key concern areas for SMEs in India. Power2SME's business model has enabled thousands of MSMEs to procure raw materials at competitive prices, over the past couple of years," said Parag Dhol, MD, Inventus Capital.
Headquartered in Gurgaon, the company also has offices in Mumbai, Pune, Ahmedabad, Chennai and Kolkata. The current team size is over 150 employees.
(Edited by Joby Puthuparampil Johnson)