OfBusiness Business Model: From Procurement to Profit

The OfBusiness business model stands out as a revolutionary approach in India’s B2B ecosystem, specifically designed to support small and medium enterprises (SMEs). Founded in 2015, the company bridges the gap for SMEs in two critical areas: raw material procurement and affordable financing.

By integrating commerce and lending, OfBusiness has created a one-stop solution that empowers small and medium enterprises (SMEs) to scale their operations with ease.

Its unique approach combines traditional supply chain efficiencies with modern financial services, delivered through tech-driven platforms like BidAssist and its NBFC arm, Oxyzo Financial Services.

With a presence in 24+ states in India and operations in 35+ countries, OfBusiness has become a game changer in sectors like construction, manufacturing, and agriculture. As it prepares for an IPO in 2025, its profitable and scalable model places it at the forefront of the B2B e-commerce and fintech markets.

Origins and Founding of Ofbusiness

Founders and Vision

OfBusiness was started in 2015 by Ashish Mohapatra, Ruchi Kalra, and three other co-founders. They came from strong professional backgrounds—places like McKinsey, ITC, and IIT/IIM campuses. Their big idea? To help small and medium businesses (SMEs) in India with the two things they struggle with the most: getting the right raw materials and affordable financing.

Their vision was simple but powerful: make life easier for businesses by combining e-commerce and lending in one platform. They wanted to be the backbone for Indian SMEs, helping them grow without worrying about high costs or unreliable supply chains.

Early Days and Initial Challenges

Like any startup, OfBusiness didn’t have it easy in the beginning. One major challenge was convincing traditional SMEs to adopt digital tools. Many of these businesses had been relying on informal networks for years and were hesitant to switch.

Funding was another hurdle. Investors were cautious about lending to SMEs, a sector seen as risky and unorganized. Despite this, the team kept pushing forward. They worked hard to build trust by focusing on repeat customers and delivering consistent results.

Growth Story of Ofbusiness

Milestones Achieved

Over the years, OfBusiness has hit some impressive milestones. By 2017, it had launched BidAssist, a tool that helps SMEs find government tenders—a big win for many small businesses. In 2021, the company became a unicorn after raising $160 million, marking a $1 billion valuation.

By 2024, they weren’t just surviving—they were thriving. With a revenue of over ₹19,000 crore and operations in 24+ Indian states, they had become a key player in the B2B market. They also expanded globally, serving businesses in more than 35 countries.

Expansion into Key Markets

Initially, OfBusiness focused on sectors like construction and manufacturing, where raw materials like steel and cement were in high demand. Gradually, they expanded into other areas, including agriculture, where they provided essentials like fertilizers.

What set them apart was their ability to reach Tier-2 and Tier-3 cities. They realized these areas were underserved but had huge potential. By building strong local partnerships and offering tech-based solutions, they made a name for themselves in smaller markets.

Entry into Unicorn Status

The big break came in July 2021. OfBusiness raised $160 million in a funding round led by SoftBank, making it one of India’s fastest-growing unicorns. The achievement wasn’t just about the numbers—it showed how the company had earned the trust of both customers and investors.

Unique Edge (MOAT) of Ofbusiness

First-Mover Advantage

OfBusiness was one of the first companies to combine raw material procurement and SME financing on a single platform. This gave them a head start in a market where competitors were focused on only one of these services. They stood out by solving multiple pain points for their customers at once.

Integration of Commerce and Financing

What really made OfBusiness unique was how it connected its commerce and lending arms. For example, if a small business bought raw materials through OfBusiness, they could also apply for a loan right there. This seamless integration saved SMEs a lot of time and hassle.

Robust Underwriting Processes

Lending to SMEs is tricky because they don’t always have a long credit history. But OfBusiness used tech to make smart decisions. They looked at things like a company’s order history, payment patterns, and business health to decide if they were reliable.

This approach worked well. The company kept its non-performing assets (NPAs) under 1%, much lower than most lenders in this space. It also helped them build long-term relationships with customers, who kept coming back for both financing and raw materials.

Market Insights

B2B Market Landscape

The B2B market in India is growing fast. Companies across industries—construction, manufacturing, agriculture—are moving away from traditional supply chains to more organized, tech-driven platforms. The B2B e-commerce market is projected to grow to $125 billion by 2027.

Despite this growth, the market has its challenges. Businesses often face fragmented supply chains, unreliable vendors, and price fluctuations. That’s where platforms like OfBusiness come in, offering a one-stop shop for raw materials and financial support.

MSME Sector in India

India’s economy is strongly supported by Micro, Small, and Medium Enterprises (MSMEs). With over 63 million units, they contribute 30% to India’s GDP and employ nearly 460 million people.

However, MSMEs often struggle with limited resources. Access to credit is a big issue—most loans are hard to get or come with high interest rates. Supply chain inefficiencies are another hurdle. These gaps present huge opportunities for companies like OfBusiness to step in and offer solutions that help MSMEs thrive.

Core Verticals

Raw Material Procurement

OfBusiness simplifies raw material sourcing for SMEs in sectors like construction, manufacturing, and agriculture. It offers products like steel, cement, and chemicals directly through its platform, cutting out the middleman.

This helps businesses get materials at better prices and with guaranteed quality. The platform also handles logistics, making the process smooth and hassle-free.

Financial Lending (Oxyzo)

Oxyzo, the financing arm of OfBusiness, specializes in providing affordable loans tailored for SMEs. What makes it unique is how it integrates lending with commerce. Businesses buying materials through OfBusiness can also apply for working capital loans in one go.

With a loan book of over ₹5,500 crore, Oxyzo is a big player in SME financing. Its underwriting process uses advanced algorithms to assess creditworthiness, keeping defaults low and trust high.

Government Tender Aggregation (BidAssist)

BidAssist is a tool that helps SMEs find government tenders that match their capabilities. It pulls data from thousands of government websites, making it easy for businesses to discover opportunities without spending hours searching.

This service isn’t just about finding tenders; it’s about helping SMEs grow by giving them access to big contracts. With subscription-based revenue, BidAssist has also become a reliable income stream for OfBusiness.

Manufacturing Operations

In addition to sourcing raw materials, OfBusiness has ventured into manufacturing some of these products. By producing materials in-house, they can control costs and ensure consistent quality. This strategy also gives them higher profit margins and strengthens customer loyalty.

Revenue Streams of Ofbusiness

Income from Raw Material Sales

The biggest chunk of OfBusiness’s revenue—55%—comes from selling raw materials in bulk. These include essential goods like steel, cement, and industrial chemicals. The streamlined process and competitive pricing attract a steady flow of customers.

Lending and Interest Income

The second-largest revenue source, accounting for 43%, is interest income from loans disbursed through Oxyzo. The integration of lending with commerce has been a game changer, helping OfBusiness scale its loan book while keeping NPAs low.

Subscription Revenue (BidAssist)

Although it contributes just 2% to revenue, BidAssist’s subscription model is a smart addition. It provides steady, recurring income while offering real value to SMEs by connecting them to growth opportunities.

Manufacturing Profits

By manufacturing some raw materials themselves, OfBusiness captures more value from its supply chain. This vertical, while smaller than the others, contributes directly to profits and reinforces their role as a comprehensive solution provider for SMEs.

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Cost Drivers of Ofbusiness

Procurement and Logistics

The biggest cost for OfBusiness comes from buying and delivering raw materials. Procurement expenses made up 93% of the company’s spending in FY23. Since OfBusiness deals with bulk raw materials like steel, cement, and chemicals, these costs scale up as the business grows.

Logistics is another important factor. Ensuring timely delivery to SMEs across 24+ Indian states and 35+ countries isn’t cheap. However, this expense is crucial for ensuring customer satisfaction and maintaining reliability.

Employee Expenses

OfBusiness is growing, and so is its team. The company has over 883 employees as of 2024, and their salaries, benefits, and training add up quickly. Employee-related costs jumped to ₹326 crore in FY23.

Since OfBusiness operates in tech-enabled sectors like fintech and B2B commerce, investing in skilled professionals is crucial. These expenses aren’t just a cost—they’re an investment in the company’s ability to innovate and grow.

Underwriting and Loan Origination

For Oxyzo, the financing arm, underwriting is critical. Assessing the creditworthiness of SMEs involves gathering data, running algorithms, and manual checks. These processes ensure that loans go to reliable borrowers, but they also come with significant costs.

Loan origination costs—like processing applications and managing disbursals—also add up as the loan book expands. While necessary, these expenses are carefully managed to maintain profitability.

Competitive Landscape

B2B Marketplace Competitors

The B2B market is crowded, with major players like Zetwerk, Moglix, and Infra.Market leading the charge:

• Zetwerk focuses on custom manufacturing solutions and raised $240M in 2021, emphasizing its global reach.
• Moglix, valued at $2.6 billion, specializes in industrial goods and has a strong presence in India and international markets.
• Infra.Market dominates the construction materials segment, generating over ₹11,900 crore in revenue as of FY23.

These companies compete with OfBusiness on raw material pricing, logistics, and customer service, making differentiation key.

NBFC and Lending Rivals

In the financial services space, rivals like Capital Float, InCred, and SMEcorner offer lending solutions tailored to SMEs.

• Capital Float has carved out a niche in digital lending with quick, tech-enabled processes.
• InCred focuses on personalized financial solutions with competitive interest rates.
• Traditional NBFCs like Bajaj Finance and Aditya Birla Finance also compete for the SME lending pie.

OfBusiness stands out with its integrated commerce and lending model, but these competitors keep the market dynamic.

Tender Aggregation Competition

In the tender aggregation space, TendersOnTime is a key competitor to BidAssist. TendersOnTime tracks 100,000+ purchasers globally and publishes 50,000 notices daily, giving SMEs broad access to opportunities.

BidAssist differentiates itself with a user-friendly interface and recommendations tailored to SME profiles, but staying ahead in this niche requires continuous innovation.

Market Opportunities for Ofbusiness

Expanding SME Insurance Penetration

India’s SME insurance market is vastly underpenetrated. Around 85% of SMEs lack insurance coverage, leaving them exposed to risks like payment defaults and supply chain disruptions.

OfBusiness can capitalize on this gap by offering customized insurance products through its platform. This would not only provide a new revenue stream but also strengthen customer loyalty by addressing critical business needs.

Geographical Expansion into Tier-3 and Tier-4 Cities

While OfBusiness already has a strong presence in Tier-1 and Tier-2 cities, smaller cities hold untapped potential. These areas are seeing rapid industrial growth and digital adoption.

By focusing on localized marketing and partnerships, OfBusiness can capture new customers in these underserved regions. The company’s ability to deliver affordable financing and raw materials will be a big advantage here.

Global Market Reach

OfBusiness has already expanded to 35+ countries, but there’s room for more. Regions like Southeast Asia and Africa have growing SME sectors that face similar challenges as India.

By adapting its offerings to international markets, OfBusiness can build a global footprint while diversifying its revenue streams. The key will be maintaining its competitive pricing and efficient supply chain management.

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Key Challenges of Ofbusiness

Credit Risks and Loan Defaults

Lending to SMEs comes with risks. Many small businesses have unstable cash flows, making them more likely to default on loans. While OfBusiness has managed to keep its Non-Performing Assets (NPAs) below 1%, the inherent risk remains.

If economic conditions worsen or industries like construction face downturns, defaults could rise. To counter this, OfBusiness relies on robust underwriting and careful borrower selection. Even so, maintaining this low default rate as the loan book grows is an ongoing challenge.

Increasing Competition in the B2B Space

The B2B e-commerce market in India is heating up, with big names like Zetwerk, Moglix, and Infra.Market making significant inroads. These companies are backed by strong investors and are rapidly expanding their offerings.

OfBusiness must stay ahead by offering competitive pricing, faster deliveries, and value-added services like financing. As competitors innovate and expand globally, the pressure to differentiate increases.

Geopolitical and Supply Chain Risks

Operating in sectors like construction and manufacturing means OfBusiness is heavily reliant on raw material supply chains. Disruptions caused by geopolitical tensions, trade restrictions, or even natural disasters could lead to delays and increased costs.

For example, a steel supply chain hiccup could impact the company’s ability to fulfill orders. OfBusiness mitigates these risks by diversifying suppliers and maintaining strong logistics networks, but global uncertainties remain a factor.

Financial Performance of Ofbusiness

Revenue and Profit Growth

OfBusiness has demonstrated remarkable financial growth in recent years.

• FY22: Revenue of ₹7,140 crore with a profit of ₹201 crore.
• FY23: Revenue more than doubled to ₹15,343 crore with a profit of ₹463 crore.
• FY24: Revenue rose further to ₹19,296 crore, with a profit of ₹603 crore.

This growth is driven by the company’s expanding customer base, increased transactions, and the success of its lending vertical.

EBITDA and ROCE Trends

The company’s EBITDA margin improved from 6.30% in FY23 to 7.44% in FY24. This shows better operational efficiency and cost management.

• Return on Capital Employed (ROCE) also rose from 9.28% in FY23 to 12.23% in FY24, signaling strong returns for investors.

These metrics highlight that OfBusiness isn’t just scaling—it’s scaling profitably.

Investments and Acquisitions by Ofbusiness

Strategic Investments in Startups

OfBusiness has invested in four startups to date:

1. Bidso: Pre Seed Round, $300K (Aug 2023).
2. TraceCost: Corporate Round, $2.5M (July 2022).
3. FarMart: Series A, $10M (Oct 2021).
4. UpScalio: Series A, $42.5M (Aug 2021).

These investments align with OfBusiness’s goal of expanding its ecosystem. For instance, Bidso helps SMEs with bidding, complementing OfBusiness’s own offerings.

Mergers to Expand Offerings

OfBusiness has acquired two companies:

1. Koeleman India: Acquired for $10M in April 2023.
2. SMW Ispat: Acquired in May 2022 (price undisclosed).

These acquisitions enhance OfBusiness’s capabilities in raw material procurement and manufacturing, helping it gain better control over supply chains and improve margins.

Key Learnings from OfBusiness

1. Focus on Solving Core Problems

OfBusiness identified two fundamental challenges for SMEs: raw material procurement and access to affordable credit. By addressing these pain points directly, the company created a business model that solves real-world problems and adds tangible value to its customers. The lesson? Focus on solving critical issues for your target audience to build a sustainable business.

2. Integrate Services for Greater Value

The integration of commerce and lending is a hallmark of the OfBusiness business model. This approach simplifies operations for SMEs, allowing them to source materials and secure financing through a single platform. Businesses can learn the power of combining complementary services to create a seamless, end-to-end solution.

3. Leverage Technology for Scalability

OfBusiness uses tools like BidAssist and advanced underwriting algorithms to streamline processes, improve decision-making, and scale efficiently. The takeaway is clear: leveraging technology not only reduces operational inefficiencies but also enhances customer experience and builds competitive advantages.

4. Prioritize Financial Discipline

Unlike many startups, OfBusiness has consistently focused on profitability while scaling. Its EBITDA margins and low NPA rates highlight the importance of maintaining financial health. Startups should learn to balance growth with sustainability to ensure long-term success.

5. Understand Your Market Deeply

OfBusiness’s success stems from its in-depth understanding of the fragmented SME market. By tailoring its offerings to meet the specific needs of businesses in Tier-2, Tier-3, and rural markets, the company unlocked massive growth opportunities. The key learning? Know your audience and customize your approach to serve them effectively.

Future Plans

IPO Preparation for 2025

OfBusiness is gearing up for an IPO in the second half of 2025. The offering is expected to raise between $750 million and $1 billion, with $200 million coming from new shares and the rest from existing stakeholders.

The company has already engaged top investment banks like Bank of America, Citigroup, JP Morgan, Axis Capital, and Morgan Stanley to handle the process. The IPO will mark a major milestone in OfBusiness’s journey, offering greater visibility and access to capital for future growth.

Scaling Commerce and Lending Verticals

OfBusiness plans to grow its commerce operations by four times and its lending vertical by two times in the coming years. This involves deeper penetration into Tier-3 and Tier-4 cities and expanding its global footprint.

As Co-Founder Ashish Mohapatra said, “We are just at the beginning of the B2B revolution in India.” By focusing on unorganized and fragmented markets, OfBusiness aims to unlock significant opportunities for growth.

Conclusion

OfBusiness has demonstrated how a focused, tech-enabled strategy can transform the fragmented B2B market in India. By addressing core challenges like supply chain inefficiencies and lack of access to credit, the company has created a sustainable business model that not only drives revenue but also empowers SMEs. With its planned IPO and ambitious growth targets, OfBusiness is poised to lead the next wave of innovation in the B2B and fintech sectors, both in India and globally.

Source: GrowthX, thekredible, startuptalky, and etc.

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