Exclusive: Tiger Global may back OfBusiness at $3 billion valuation

OfBusiness may also go public in the next two-three years or so, sources said, but no concrete plans have been made.

Lending and e-commerce firm OfBusiness is in talks to raise funds valuing it at $3 billion, doubling from $1.5 billion in a SoftBank-led round recently, said three people aware of the matter.

Tiger Global Management- the New York-based firm upending the investment world is expected to invest about $150 million at $3 billion post money, said the people cited above, requesting anonymity.

OfBusiness, founded in 2015 by former McKinsey executive and venture capitalist Asish Mohapatra, lends via a non-banking finance company (NBFC) to small and medium enterprises which have a turnover between Rs 20-Rs 200 crore.

It lends by  providing raw material- which the company would use the money to buy anyway- in addition to just capital and offers a credit line at an interest rate of 1.5% per month.

The company claims SMEs get the best price for their raw material requirements via OfBusiness’s bidding platform. Its technology platform negotiates with more than 100 manufacturers and suppliers across India to get best guarantee prices on structural steel, polymer, paper and cement.

Discussions with Tiger are still at an early stage and the deal is expected to close over the next few months.

Tiger and OfBusiness declined to comment.

On the face of it, OfBusiness’ valuation has grown by four times in as many months, given that it raised funds at an $800 million valuation in April. However, people said that the SoftBank round- which Moneycontrol first reported in June- was based on OfBusiness’ numbers from early this year- discussions prolonged due to the coronavirus second wave.

“They’re raising at double the price because they have grown 30-40% this year, despite pandemic related setbacks. It is aggressive, but such is the market,” said one person aware of talks.

Its other investors include Falcon Edge Capital, Norwest Venture Partners, Matrix Partners and most recently, SoftBank

India is currently witnessing a record funding boom for internet companies, with startups raising money at double and triple their previous valuations every few months. Earlier today, construction marketplace Infra.Market raised $125 million from Tiger, valuing it at $2.5 billion, compared to $1 billion in April.

OfBusiness and Infra.Market target similar customers, but Business is selling larger quantities and is operating in bigger categories than Infra.market, which is running a private label to sell stone materials, concrete, and walling solutions.

OfBusiness may also go public in the next two-three years or so, people said, but no concrete plans have been made.

This also won’t be the first time Tiger will invest in competing companies in a sector- generally a strict no-no for venture investors.

It has earlier invested in Upstox and Groww- both online investment platforms; gaming firms Dream11 and My11Circle, and online education firms Byju’s, Unacademy and Vedantu. Moneycontrol also reported that Tiger is in talks to invest in ecommerce roll up firm Mensa Brands, floated by former Myntra CEO Ananth Narayanan- although it is an investor in GOAT Brand Labs, a direct competitor to Mensa.