Inside IndiaMART's $100 mn bet on nine startups in FY22

“After we got listed in July 2019, we thought of expanding the ecosystem of IndiaMART”, Dinesh Agarwal, co-founder and chief executive officer

MUMBAI, NEW DELHI : IndiaMART InterMESH Ltd, one of India’s oldest internet firms, has been actively investing in startups since its listing in 2019. In this fiscal year 2021-22 alone, the business-to-business (B2B) marketplace has invested over $100 million across nine companies. One of the deals included a 100% acquisition of accounting software company Busy Infotech Pvt. Ltd for ₹500 crore in its biggest deal so far.

Noida-based IndiaMART, a beneficiary of venture capital and private equity investors like Amadeus Capital and WestBridge Capital before it went public, has made 11 investments worth over ₹950 crore since its listing.

“After we got listed in July 2019, we thought of expanding the ecosystem of IndiaMART,” Dinesh Agarwal, co-founder and chief executive officer, IndiaMART told VCCircle in a virtual interaction.

A closer look at the company’s 11 investments shows that it is looking to expand horizontally at a time when competition in the online B2B e-commerce space is heating up from new-age technology companies such as Udaan, Zetwerk, and Moglix among others, which have pocketed significant venture funding over the last three years and are fast expanding in the country.

However, Agarwal noted that IndiaMART is different from the new-age companies and is making investments in startups, not because of competition from them. “I’m not diversifying because I am facing competition there. I’m simply saying that because I generate a good amount of cash, capital allocation is one important aspect that one should always be looking at,” he added.

Agarwal said IndiaMART’s investments have primarily been in companies catering to three sectors accounting and finance, marketing, and logistics that provide business enablement solutions. As of now, the accounting space has cornered the biggest share of IndiaMART’s investments at over ₹600 crore across three firms.

In September 2019, the company picked up a 26% stake in Simply Vyapar Pvt. Ltd, marking its first bet in the accounting space. Vyapar offers a GST (goods and services tax) billing, accounting, and inventory management product for small businesses allowing them to digitize their business operations and claims to have over 100,000 paying customers for its product. In January this year, IndiaMART made a follow-on investment in the company. It currently holds a 27% stake in Vyapar and has so far invested ₹92.75 crore in it.

“Ever since I know computers, the first and foremost use of it has been accounting for businesses. So that’s the first need of every business. In 2015-16 when the change happened from the desktop computer to the mobile computer or mobile smartphones, that’s when I was looking for a company that is more mobile-friendly on accounting and that’s why I invested in Vyapar,” said Agarwal.

IndiaMART made its second accounting bet on EasyeEcomm, a platform that offers ready integrations with major e-commerce platforms such as Flipkart and Amazon, web storefront providers such as Shopify, Zepo, and StoreHippo, and logistics providers such as Delhivery and Bluedart. IndiaMART invested ₹13.35 crore for a 26% stake in EasyEcomm. The company made its biggest bet in the accounting space in January this year by acquiring a 100% stake in Busy Infotech Pvt. Ltd for ₹500 crore. Busy, founded in 1997, offers an accounting software platform.

“This (the acquisitions) expands our ecosystem. Not everybody today wants an online marketing lead chain like IndiaMART, but everybody wants some kind of accounting solution, and that expands our base,” Agarwal added. Agarwal further said he was confident of these investments helping IndiaMART acquire more customers going forward.

Other than accounting, IndiaMART has invested heavily in logistics companies, by making investments worth ₹154.85 crore in as many as five companies to date.

Inside IndiaMART’s $100 mn bet on nine startups in FY22 | Mint

“After we got listed in July 2019, we thought of expanding the ecosystem of IndiaMART”, Dinesh Agarwal, co-founder and chief executive officer