Oxyzo steps out of OfBusiness' shadow, turns unicorn in India's largest Series-A round

One unicorn gives birth to another as Oxyzo, the financing vertical of B2B marketplace OfBusiness, bags $200 million in Series-A funding round led by Alpha Wave Global at a valuation of $1 billion.

The round — India's largest-ever Series-A fundraise — saw the participation of Tiger Global, Norwest Venture Partners, Matrix Partners, and Creation Investments.

Oxyzo, now carved out of OfBusiness, is India's 94th unicorn, according to Venture Intelligence. Last year, OfBusiness achieved the billion-dollar status and has since seen its valuation rise by nearly 4x to $5 billion with SoftBank, Tiger Global, Matrix Partners India, Zodius Capital, and Alpha Wave Global investing across multiple rounds in less than the last 12 months.

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Oxyzo Financial Services was one of OfBusiness' three verticals. The other two are the B2B e-commerce vertical and SaaS offerings. All three feed off each other and enable OfBusiness to provide a full-stack offering to SME customers.

"We're excited to support Oxyzo as it steps out of the Group's shadows to disrupt the digital financial services space. As the B2B landscape in India evolves, OfBusiness and Oxyzo will be twin pillars to open up opportunities and lower costs for millions of SMEs across India," said Griffin Schroeder, Partner, Tiger Global, which is now a common investor in both OfBusiness and Oxyzo.

Given the credit gap faced by SMEs in India, Oxyzo was instituted to give affordable loans to SMEs to help them buy raw materials on or off the OfBusiness' marketplace, which sells a range of products from steel and petrochemicals to food grains.

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Oxyzo has since evolved into what it calls 'a tech-enabled smart financing solution provider', catering to the needs of SMEs, mid-corporates as well as the new economy companies in India. Oxyzo claims to have assets under management of $350 million with a 100 percent year-on-year growth.

With this funding round, it wants to broaden its digital financial services play, expanding the supply-chain marketplace, launching fixed income products for SMEs, and scaling other fee incomes business lines, including debt capital markets and securities.

"With the emergence of the digital economy, we see a marked shift in the emerging needs and servicing approach in the B2B segment. We want to be at the forefront of this as a diversified financial services company, differentiated through its innovative financial products and digital platforms on the back of strong credit and origination capabilities," said Ruchi Kalra, co-founder, and CEO, Oxyzo.

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A former Mckinsey consultant, Ruchi Kalra held the distinction of being amongst the few women founders or co-founders in the unicorn club. In 2015, she co-founded OfBusiness with her husband Asish Mohapatra.

In what's a first, India's unicorn club will now have a wife-husband duo, each heading a billion-dollar startup independently. She will now lead Oxyzo along with Vasant Sridhar, who is another co-founder of OfBusiness. Whereas, Asish Mohapatra, Bhuvan Gupta, and Nitin Jain will continue to focus on OfBusiness’ other verticals.

"Many people have thought about lending and technology, saying, I need to acquire customers online and that's about it. We thought about it a little differently," Ruchi Kalra told CNBC-TV18 in an earlier interview.

"Our lending is very short-term in nature. Our customer takes the line, uses it, and only pays for as much as he/she is using and the money keeps coming back within 90-120 days," she explained. Since its inception, Oxyzo claims to have disbursed cash flow-based financing worth over $2 billion to more than 4,500 MSMEs.

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"Why is that possible for such a large book and within a span of 3-4 years despite the fact that we already have a lot of leverage in terms of banks giving us lending so that we can lend ahead? That's primarily because of technology, which enables great monitoring through various triggers. That ensures that our credit risk, in terms of NPAs, is as low as 1.2 percent," she said.

Oxyzo uses OfBusiness' B2B e-commerce platform and Software As A Service (SaaS) solutions as data engines to assess credit risk before lending.

According to Asish Mohapatra, this quality lets both OfBusiness and Oxyzo secure a strong borrowing profile, enjoying the confidence of more than 50 lending partners.

With a current operating expenditure of 2.5 percent and pre-tax return on assets (RoA) of 5.5 percent, Oxyzo claims to have been profitable since inception.

In Ruchi Kalra's words, an attempt to build a house with two foundations — growth and profitability. "We have some of these aspirations. Let's build e-commerce like Reliance. Let's build a credit culture and a fintech like Bajaj. You put it all together and say, "How do I do the Raj of the B2B marketplace? We often joke like that."