IFC Invests $10 million in Power2SME, Supports its Expansion Across India

September 5, 2017: IFC, a member of the World Bank Group, has invested $10 million as equity in Power2SME, an ecommerce platform that helps small and medium companies buy raw materials at bulk prices and get working capital without collateral. 

Power2SME is the leader in B2B ecommerce for SMEs and is estimated to be five times its nearest rival. In addition to the investment, IFC will also advise Power2SME to help it expand beyond its current 14 states, improve its ability to provide working capital to SMEs by adding more banks as partners, and increase the number of users on its platforms by up to 10 times in five years. 

Power2SME is backed by venture capital firms such as Kalaari Capital, Accel Partners, and Inventus Capital. Nandan Nilekani joined as a strategic advisor through his investment in late 2015. 

“IFC’s extensive experience in supporting the SME sector through financing and deep networks with banks and financial institutions will help us in our vision to make SMEs bankable,” said R Narayan, Founder and CEO, Power2SME. 

Micro, small and medium enterprises form a large part of the Indian economy, accounting for 45 percent of the country’s industrial output and 40 percent of its exports. There are 48.8 million MSMEs in India, which employ 111 million people. There is critical shortage of long-term funding for the sector. Some estimates put the gap at $320 billion against a total of demand of $500 billion. India has the largest base of SMEs in the world after China. However, Indian SMEs contribute only 8-10 percent to the GDP, compared to 60 percent in China. 

“Our investment in Power2SME will spur greater VC interest in the SME sector in the country and support India’s vision to become a global manufacturing hub,” said Ruchira Shukla, Venture Capital and Private Equity Lead, IFC South Asia. 

IFC makes direct equity investments in start-ups and as a limited partner in venture capital funds. Our focus sectors include consumer internet, edutech, healthtech, cleantech, and B2B eCommerce. 

IFC is one of the early institutional investors in India’s SME finance space and a supporter of companies that develop digital platforms to transform traditional sectors. IFC has invested close to $1 billion in financial intermediaries in India to enable credit financing for SMEs. Since 1956, IFC has invested in over 400 companies in India, providing $17 billion in financing to the private sector. 

About Power2SME 
Power2SME, India’s first ‘Buying Club’ for SMEs in India, began operations in 2012 and operates out of 7 offices and 14 states in India with a current employee strength of 250.  With a registered SME base of 50,000 SMEs, the company aims to create India’s No1 digital ecosystem for SMEs delivering raw material procurement at competitive prices and access to finance at improved rates of interest thus driving higher efficiencies and profitability. Its product portfolio boasts three platforms addressing challenges in raw material procurement, Finance and MRO needs. Its B2B raw materials buying club (Power2SME.com) aggregates demand from SMEs for most commonly acquired raw materials (such as steel, chemicals, polymers, yarn etc.) and procures and sells these at competitive prices.  Second its platform (FinanSME.com) connects empaneled lenders with SMEs in order to provide working capital finance at better terms from banks and non-banking financial institutions for purchases on Power2SME. Third is a one stop shop addressing SME MRO needs (SMEShops.com) to meet the growing and frequent requirements of SME buyers for consumable industrial goods and for sellers to reach out to customers and widen their market access. 

About IFC 
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY17, we delivered a record $19.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. 

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