IFC invests $10 million in Power2SME, to support it expand across country for helping MSMEs

New Delhi, Sept 6 (KNN) The International Finance Corporation (IFC), a member of the World Bank Group, has invested USD 10 million as equity in Power2SME, an ecommerce platform that helps small and medium enterprises (SMEs) buy raw materials at bulk prices and get working capital without collateral.

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, leading B2B ecommerce company for MSMEs, is backed by venture capital firms such as Kalaari Capital, Accel Partners, and Inventus Capital. Nandan Nilekani joined it 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.

“Indian SMEs 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 SME ecosystem by addressing key challenges that are roadblocks to SME growth. We have aggressive plans to boost our revenues and continue on our path of profitability” Narayan added.

Micro, small and medium enterprises (MSMEs) 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 USD 320 billion against a total of demand of USD 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.

“By working with SME-focused companies and partner financial institutions, we aim to improve access to finance for over one million SMEs in the next five years,” she added.

Following the recent slowing of start-up funding in India, IFC has made a strategic decision to increase its venture capital investing. IFC makes direct equity investments in start-ups and as a limited partner in venture capital funds. Our sectors of focus include consumer internet, edutech, healthtech, cleantech, and B2B eCommerce.

IFC is one of the early institutional investors in India’s SME finance space and an early 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. (KNN Bureau)