Months after first signaling plans for the investment, the International Finance Corporation (IFC) has placed $10 million in group buying site Power2SME.
Reports Tuesday (Sept. 5) said the IFC, a member of the World Bank Group, had announced the equity investment in the company, which provides small- and medium-sized businesses (SMBs) with a B2B eCommerce platform and a working capital solution.
“In addition to the investment, IFC will also advise Power2SME to help it expand beyond its current 14 states [in India], improve its ability to provide working capital to small and medium enterprises by adding more banks as partners and increase the number of users on it platforms by up to 10 times in five years,” the IFC and Power2SME said in a joint announcement.
Investment from the IFC follows funding from backers at Kalaari Capital, Accel Partners and Inventus Capital, reports noted.
“IFC's extensive experience in supporting the [SMB] sector through financing and deep networks with banks and financial institutions will help us in our vision to make [SMBs] bankable,” said Power2SME founder and CEO R. Narayan in a statement. “Indian [SMBs] are critical to making India a manufacturing hub, and we must foster the sector if we are to meet the national imperative of inclusive growth. We aim to continue strengthening the [SMB] ecosystem by addressing key challenges that are roadblocks to [SMB] growth.”
According to reports, micro-, small- and medium-sized businesses make up 45 percent of India's industrial output and 40 percent of its exports. Reports in Business Standard noted a $320 billion gap in working capital for these companies, by some estimates.
“Our investment in Power2SME will spur greater venture capital interest in the [SMB] sector in the country and support India's vision to become a global manufacturing hub,” said IFC South Asia venture capital and private equity lead Ruchira Shukla in another statement. “By working with [SMB-focused] companies and partner financial institutions, we aim to improve access to finance for over one million [SMBs] in the next five years.”