B2B e-marketplace on investors’ radar

Times Of India

Business-to-business (B2B) online marketplaces are finally getting onto investors’ radar. The interest and funding for these players catering to small- and medium-sized (SME) businesses come at a time when online retailers are finding it tough to justify their existing valuations despite attaining scale.

IndiaMART, one of the oldest players in the B2B category, is learnt to have raised Rs 150 crore in its latest financing round led by UK-based tech venture fund Amadeus Capital along with Quona Capital and India-focused investment fund Westbridge Capital, sources told TOI. IndiaMART’s existing investor Intel Capital has also participated in this round, people familiar with the matter said.

A majority of the latest funds would be used to push IndiaMART’s online marketplace for B2B commerce, Tolexo, which competes with a string of new ventures. TOI reported recently that Matrix Partners, along with others, pumped $5 million into Gurgaon-based OfBusiness.
When contacted by TOI, Dinesh Agarwal, founder & CEO, IndiaMART, confirmed the fund-raise.

Ganesh Rengaswamy, partner at Quona Capital, the investment manager of Accion Frontier Inclusion Fund, said, “By providing much-needed commerce, financing and payment solutions to India’s MSMEs, IndiaMART can address the key bottlenecks that impair their access to both resources and capital.”
Other early-stage startups in the B2B commerce category which typically sell include Moglix, mSupply.com and Industry Buying, among others. There are as many as 175 ventures in the B2B online marketplace category, according to startup data collector Tracxn. “The online marketplace for B2B commerce is gaining traction now and IndiaMART’s plan is to ramp up Tolexo as a platform,” a person directly aware of the development said.

The company is also looking to provide financing schemes to SMEs and launch an advertising platform going forward, sources said. Sites like Tolexo sell industrial goods and supplies from categories like power tools, safety equipment and office supplies to businesses of all size and scale.

IndiaMART was looking to raise a much larger sum of around $200 million, but with the funding environment sobering down, the 20-year-old company settled for a smaller cheque, sources said. Previously, IndiaMART had raised Rs 49 crore in its series B round from Intel Capital in 2009, while it got Rs 15 crore from Bennett, Coleman & Co Ltd in 2007. BCCL is the parent of the Times Group which publishes this newspaper.

Bhavani Rana, who led the investment on behalf of Amadeus Capital, commented, “Leading the Series B financing into IndiaMART, India’s most successful B2B classified listing marketplace, represents Amadeus Capital’s first direct investment in India. The investment fits Amadeus’ strategy of backing entrepreneurs benefiting from increased penetration of digital technology in emerging markets. As MSMEs in India increasingly come online, IndiaMART offers buyers a trusted platform and tools to search from over 30 million products and connect with reliable competitive suppliers. Through its subsidiary Tolexo, IndiaMART is able to utilize data to help consummate transactions within the platform. We are excited to be working with founders Dinesh and Brijesh as they grow and expand into new market segments.”

Sources said the Noida-based IndiaMART is likely to close the current fiscal year with a revenue of around Rs 300 crore. Founded in 1996, IndiaMART’s majority business comes from SMEs as it connects wholesale sellers and buyers on its platform. It earns a commission of about 1% from such transactions.

Started in August 2014, Tolexo is IndiaMART’s online retail marketplace which works as a platform for transactions between these buyers and sellers. According to Brijesh Agarwal, founder of Tolexo, it has transacted with over 2 lakh businesses that have made purchases at least once on the website. IndiaMART claims to have over 20 lakh suppliers on its platform along with 25 crore consumers, mostly in the SME space.

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