OfBusiness Business Model - GrowthX Deep Dive

In 2015, Ashish Mohapatra left venture capital to transform India’s MSME sector by founding OfBusiness. Despite early challenges, including 73 investor rejections, OfBusiness grew into a billion-dollar enterprise, delivering over ₹19,000 crore in revenue. Today, it empowers over 1M SMEs through innovative commerce and financing solutions, revolutionizing the B2B landscape.

OfBusiness Business Model - GrowthX Deep Dive
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How was OfBusiness founded? 🌱

In 2015, Ashish Mohapatra made a bold decision that would reshape the Indian MSME sector.
Leaving behind a successful career in venture capital, he founded OfBusiness—a startup aimed at revolutionising the B2B landscape for small and medium enterprises (SMEs) in India.
With an impressive background that included stints at McKinsey and Matrix Partners, Ashish had analysed countless companies and noticed one undeniable trend: the Indian economy was booming, especially in the MSME sector, which contributes nearly 30% to India’s GDP!! 🤯
However, Ashish also saw a couple of significant problems that SMEs faced, particularly in accessing resources and financing. Being the bullish VC that he is, he assembled a team of four other co-founders to crack this complicated market.
Together, they launched OfBusiness, a platform designed to empower SMEs by offering a unique blend of commerce and financing solutions.
If you are interested in uncovering the business models of other internet-first companies, you can check out MakeMyTrip Business Model & other blogs here.
OfBusiness Founders
OfBusiness Founders

Journey ✨

Despite the challenges, including 73 investor rejections in the first six months, the team’s conviction never wavered.
Fast forward to today, OfBusiness is a billion-dollar enterprise, achieving over 19,000 crore in revenue in FY24 and delivering over 5,00,000 orders across 30+ countries.
Its financing arm, Oxyzo, which was launched in 2016, has grown into a $1 billion startup in its own right, with a loan book of 5,578 crore as of FY23.
🏦
A loan book is like a company’s record of all the loans they have given out to borrowers. It shows the total amount of money they've lent.
OfBusiness didn't stop there.
In 2017, they launched BidAssist, a revolutionary platform that aggregates and recommends government tenders to SMEs, making it easier for them to discover and win new opportunities.
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BidAssist currently has a global reach with access to relevant government tenders from 190+ countries worldwide & an extensive database and taps into 2,00,000+ tender sources for comprehensive opportunities.
Today, OfBusiness stands as a testament to the power of resilience and innovation, reshaping the B2B e-commerce and financing landscape while empowering 1M+ SMEs to reach new heights.
B2B Supply Chain
B2B Supply Chain

OfBusiness MOAT (Competitive Advantage) 💪🏻

1. First Mover Advantage
Imagine you’re running a small or medium-sized enterprise (SME) and you have two pressing questions:
👉🏻 "Where can I get affordable raw materials?"
👉🏻 "How can I get the money to buy them?"
Traditionally, distributors didn’t want to lend money, and banks weren’t interested in helping with raw material procurement.
OfBusiness saw this gap and combined commerce and lending to solve these problems. They became the first company to do this, offering SMEs both the raw materials they needed and the financing to buy them. This unique approach gave them a significant edge in the market.
2. Cracking the NPA Code
When a company lends money, there’s always a risk that they might not get it back. This is what we call Non-Performing Assets (NPAs).
🌟
In the MSME lending industry, the average NPA rate is 4-5%. But OfBusiness has managed to keep their NPA rate below 1%, which is a huge achievement.
How did they do this? Through a strong focus on two key areas: underwriting and collection.
Underwriting is the process of figuring out if someone is likely to repay a loan, and collection is the process of getting the money back if they don’t pay on time.
OfBusiness only lends to companies with a minimum revenue threshold and solid creditworthiness. Plus, their co-founder, Ashish, personally oversees the collections process, ensuring it’s done with precision and discipline.
3. Repeat Customers
Another reason OfBusiness has such low NPAs is that their customers keep coming back. Think about it: if you’re a business regularly buying raw materials from OfBusiness, you won’t want to mess up that relationship.
These repeat customers ensure that payments are made on time, further strengthening OfBusiness’s position in the market.
4. The Amazon of B2B
OfBusiness didn’t stop at just selling raw materials and providing financing. They wanted to capture more of the value chain, much like how Amazon branched out into different areas to boost profits.
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In the B2B space, there are four main ways to make money:
a. Distributing raw materials
b. Offering support services (like warehousing and logistics)
c. Financing, and
d. Manufacturing
After mastering raw material aggregation and financing, OfBusiness moved into manufacturing. They started producing materials that were in high demand but had limited supply, which not only increased their margins but also made their customers more loyal.
Today, manufacturing accounts for 27% of their revenue—a significant chunk that shows how well this strategy has worked.
Companies acquired by OfBusiness
Companies acquired by OfBusiness
5. Zero Customer Acquisition Costs
Acquiring customers can be expensive, especially in the B2C world, where companies spend heavily on advertising. But OfBusiness took a different route with their tool, BidAssist.
BidAssist helps SMEs find and apply for lucrative government contracts. It’s a freemium tool, meaning it’s free to use with some premium features available for a fee. This tool has attracted over 20 lakh SMEs to OfBusiness, all without spending big on marketing.
As SMEs sign up, they enter OfBusiness’s ecosystem, and many of them turn to OfBusiness for financing, creating a self-sustaining loop of new customers—all at zero acquisition cost.
💡
By the way, the depth you see here is just a feeler of the depth we teach at GrowthX 💫 GrowthX is an invite-only club of over 3000 members who are product, marketing, and business leaders, and founders from top internet-first companies like Google, Canva, CRED, Stripe, Netflix, and more 💎 We teach our members how to scale revenues via frameworks that can be applied starting next Monday morning. The GrowthX Membership is built on 3 core pillars:
1. Learning experience: Where you learn the science of revenue-led growth with frameworks actionable the next Monday morning. 2. Curated community: Where you access a safe space for you to soundboard anything that is stressing you at work.
3. Career outcomes: Over 35% of members are founders & are able to hire growth teams to scale revenue for their companies while operators are able to get into breakout leadership roles. Explore GrowthX Membership 🏆

Market Overview 🔍

MSME Sector Overview

MSME Breakdown
MSME Breakdown
OfBusiness primarily serves SMEs, a crucial segment of the Indian economy.
As of March 2024, over 40 million MSMEs were registered on the Udyam portal, with 97.7% being micro-enterprises.
These businesses are expected to benefit from a projected 7% growth in FY24, fuelled by increased capital expenditure and hiring.
MSME Udyam Registration, was created by the MSME Ministry to classify MSMEs and provide them with benefits. With Udhyam registration online, the registered organisations will automatically appear in other government databases with the company's PAN, GST, and IT data.
🇮🇳
The SME sector is a significant contributor to India’s GDP, accounting for nearly 30% and providing employment to more than one-third of the population.
notion image

OfBusiness’s Verticals

OfBusiness primarily operates in two verticals
1. Raw Material Procurement
👉🏻 Why OfBusiness Chose This Vertical: OfBusiness identified significant pain points in the raw material supply chain, particularly for suppliers dealing with small and medium-sized enterprises (SMEs).
Suppliers often face delays in payments due to SMEs' financial constraints, have limited visibility into their end customers due to reliance on intermediaries, and are confined to working with a small number of unreliable traders.
These challenges make it difficult for suppliers to manage cash flow and grow their businesses.
👉🏻 What OfBusiness Was Trying to Achieve: To address these issues, OfBusiness entered the raw material procurement vertical with the goal of creating a more transparent and efficient supply chain.
By guaranteeing timely payments, they aimed to provide suppliers with the financial stability needed to operate smoothly.
By directly connecting suppliers with SMEs, they sought to eliminate the dependency on middlemen, giving suppliers better visibility and access to a broader, more reliable customer base.
Though OfBusiness deals in sourcing of a myriad of raw materials, here are some of the major sectors it operates in 👇
  • Manufacturing & Industrial Goods
    • 🔥
      Manufacturing is projected to reach a valuation of $1 trillion by 2025-26
      The manufacturing industry is a cornerstone of the Indian economy, contributing around 17% to the nation’s GDP.
      This sector is expected to grow at a CAGR of over 4% from 2023 to 2028, driven by digital transformation and government initiatives like Make in India and PLI schemes.
  • Agriculture
    • Agriculture remains a vital sector, providing livelihoods to 42.3% of India’s population and contributing 18.2% to the GDP.
      The sector is expected to grow at a CAGR of 4.9% from 2024 to 2029. OfBusiness supports this sector through its agri-fulfillment and financing platform.
  • Infrastructure & Construction
    •  India’s infrastructure and construction sectors are crucial for the nation’s development.
      🛠
      The infrastructure market is expected to grow to $322.27 billion by 2029, at a CAGR of 9.5% from 2024-2029.
      Meanwhile, the construction market is currently valued at around $639 billion and is anticipated to grow at a CAGR of over 6% during the forecast period.
Contribution of MSME to all India GDP
Contribution of MSME to all India GDP
2. Lending
👉🏻 Why OfBusiness Entered the Lending Vertical: SMEs in India often struggle with securing affordable credit due to the complex and stringent requirements of traditional banks. This lack of access to credit hampers their ability to grow and manage operational costs effectively.
Recognizing this gap, OfBusiness entered the lending vertical to offer financial solutions tailored to the needs of SMEs.
👉🏻 What Problem They Were Trying to Solve: OfBusiness sought to provide unsecured credit at competitive rates, making it easier for SMEs to access the funds they need without the burdensome documentation and collateral requirements typical of traditional financing options.
They also aimed to offer better pricing on raw materials through these credit services, thus reducing the overall costs for SMEs.
  • NBFC Market: The NBFC sector in India is robust, with a market size of USD 326 billion as of 2023.
    • The loan book of NBFCs is expected to grow by 13% to reach INR 50 trillion by March 2024, driven by rising retail consumerism, the formalization of MSMEs, and increased financial penetration in the manufacturing sector.
💳
As of March 2023, services MSMEs accounted for 66.6% share of NBFC credit to the MSME sector vis-a-vis 33.4% of MSMEs in industries.
  • Enterprise Fintech: India’s enterprise fintech industry is on the rise, projected to reach a market size of $20 billion.
    • This growth is driven by sectors like banking, lending, payment, and insurance. However, funding for the segment saw a significant decline of nearly 53% to $2.4 billion in 2023 due to a general slowdown in funding activity.
  • B2B Finance: The B2B finance market in India is expanding rapidly, with online B2B marketplaces projected to represent a $200B opportunity by 2030.
    • This growth is underpinned by the digitalization of India’s traditionally unorganized B2B economy.
  • Loan Default Rates: The loan portfolio delinquency rate, which refers to the percentage of loans that are past due, for MSMEs fell to a two-year low of 2.3% in Q2FY24, indicating improved financial health within the sector.
    • Private sector banks reported the lowest delinquency rates, showcasing strong credit performance across the industry.

Competitive Landscape 🥊

B2B Marketplace Competitors

1. Power2SME
  • Founded in 2012, Power2SME has carved out a niche by providing essential raw materials like steel, chemicals, and polymers to SMEs.
  • In FY23, it saw its gross revenue jump to Rs 1,063 crore, with 99% of that coming from the sale of goods.
  • Power2SME also offers financial services through its subsidiaries, catering specifically to the capital needs of SMEs. This makes it a strong competitor in the B2B marketplace, especially for SMEs looking for both materials and financing solutions.
2. Moglix
  • Another key player is Moglix, an Indian e-commerce company focused on industrial goods. Since its founding in 2015, Moglix has expanded its operations to several countries, including the USA and the UK.
  • With a valuation of $2.6 billion as of January 2022, Moglix claims to be one of the largest e-commerce platforms for industrial goods in India.
  • In FY23, its operating revenue grew by 83% to ₹4,595 crore, highlighting its strong growth trajectory and market presence.
3. Infra.Market
  • Launched in 2016, Infra.Market is a major player in the procurement of construction materials. It offers a comprehensive platform for buying construction essentials like cement, ready-mix concrete, and chemicals.
  • With annual revenue of ₹11,900 crore ($1.48 billion) as of March 2023, Infra.Market stands out for its focus on the construction sector, making it a tough competitor for OfBusiness in this niche market.
4. Udaan
  • Founded in 2016, has quickly expanded its operations across diverse categories including FMCG, Staples, Fruits & Vegetables, and Pharma.
  • Through its fintech arm, UdaanCapital, the company addresses the working capital needs of small businesses, manufacturers, and retailers, serving over 30 lakh retailers, 25,000 sellers, and operating in more than 900 cities.
  • In FY23, Udaan reported a revenue of ₹5,629 crores.
5. IndiaMART
  • Founded in 1999 by cousins Dinesh Agarwal and Brijesh Agrawal, began during a period of rising international demand for Indian products. Initially offering free listings for SMEs, IndiaMART grew by providing paid value-added services like website creation and maintenance.
  • Today, it connects 19.8 crore buyers with 80 lakh suppliers, offering over 11 crore products and services, and reported a revenue of ₹2,039 crores.

NBFC Competitors

1. L&T Finance Holdings Limited
  • As a subsidiary of Larsen & Toubro Limited, L&T Finance Holdings has a diversified customer base, including individuals, SMEs, and corporations.
  • Founded in 2008, it operates across urban, semi-urban, and rural areas, making it a versatile player in the NBFC space. Its strong presence and backing by L&T make it a formidable competitor.
2. Aditya Birla Finance Limited
  • This subsidiary of Aditya Birla Capital Limited is one of the top NBFCs in India, offering a wide range of credit and wealth management services.
  • It caters to a diverse clientele, from retail customers to high-net-worth individuals (HNIs) and corporations. With its strong distribution network and expanding product portfolio, Aditya Birla Finance is a key competitor in the financial services sector.
3. Bajaj Finance Limited
  • With a robust presence across rural and urban sectors in India, Bajaj Finance offers financial services to both individual and commercial clients.
  • It has a high credit rating and is well-regarded for its stability and broad market reach. Bajaj Finance’s extensive experience and strong market presence make it a significant rival in the NBFC industry.
4. Mahindra Finance
  • Was established on September 4, 1998, operates as a Non-Banking Financial Company (NBFC) and offers a broad spectrum of financial solutions.
  • These include vehicle financing for cars, tractors, and three-wheelers, as well as SME finance options like secured business loans and equipment financing.

BidAssist Competitor

TendersOnTime
  • BidAssist, a platform launched by OfBusiness to help SMEs find government tenders, faces competition from TendersOnTime.
  • Claiming to be the largest database of tenders, TendersOnTime publishes over 50,000 notices daily, tracking over 100,000 purchasers and 500+ newspapers. Its extensive database and daily updates make it a strong competitor in the tender aggregation space.
💡
By the way, the depth you see here is just a feeler of the depth we teach at GrowthX 💫 GrowthX is an invite-only club of over 3000 members who are product, marketing, and business leaders, and founders from top internet-first companies like Google, Canva, CRED, Stripe, Netflix, and more 💎 We teach our members how to scale revenues via frameworks that can be applied starting next Monday morning. The GrowthX Membership is built on 3 core pillars:
1. Learning experience: Where you learn the science of revenue-led growth with frameworks actionable the next Monday morning. 2. Curated community: Where you access a safe space for you to soundboard anything that is stressing you at work.
3. Career outcomes: Over 35% of members are founders & are able to hire growth teams to scale revenue for their companies while operators are able to get into breakout leadership roles. Explore GrowthX Membership 🏆

How does Ofbusiness make money? 💸

OfBusiness makes money by helping small and medium-sized businesses (SMEs) in India get the raw materials they need and by offering them financial support. Here’s a simple breakdown:
1. Raw Material Sales
OfBusiness buys raw materials in bulk from manufacturers directly and sells them to the SMEs at a cheaper rate.
They’ve built a massive B2B marketplace where businesses can easily buy what they need. In fact, this has been so successful that they made over ₹15,000 crores in revenue in the financial year 2023, more than doubling from the previous year.
2. Intrest on lending
OfBusiness also has a lending arm called Oxyzo.
They provide loans to SMEs specifically for purchasing raw materials.
Unlike traditional banks, Oxyzo understands the needs of these businesses better and offers a mix of secured and unsecured loans at competitive rates.
Oxyzo focuses on lending to established businesses, not startups or retailers, and this lending business is a big revenue generator.
3. Bid Assist
OfBusiness offers a service called Bid Assist, which helps businesses find and win government tenders.
This tool scrapes information from various sources and presents it to businesses in an easy-to-use format.
While it’s a great lead generator for OfBusiness, they also make money by offering a premium subscription to this service.
Plus, when a business wins a tender, OfBusiness can supply the raw materials needed for the project, creating another revenue stream.
4. Manufacturing
OfBusiness has also stepped into manufacturing their own raw materials, like steel sheets. This is similar to how Amazon makes its own products under the AmazonBasics brand.
By manufacturing their own materials, OfBusiness enjoys higher profit margins and creates stronger customer loyalty. This vertical now contributes to 27% of their overall revenue.

Cost Levers 💳

1. Procurement Costs
The biggest expense for OfBusiness is buying the raw materials that they sell to SMEs.
In FY23, this accounted for 93% of their total spending, or around ₹13,970 crores. As they scale up and serve more businesses, these costs naturally rise.
2. Employee Costs
With a growing team of about 1,074 employees, OfBusiness saw its employee expenses jump significantly, reaching ₹326 crores in FY23.
These costs include salaries, benefits, and other expenses related to hiring and retaining talent.
3. Loan Origination and Underwriting Costs
For Oxyzo, there are costs involved in assessing the risk of lending money, checking the creditworthiness of borrowers, and processing loans.
As they lend more, these costs increase, but they’re necessary to ensure that they’re making smart lending decisions.
4. Bid Assist Operational Costs
Running the Bid Assist platform comes with its own set of costs, mainly related to tech infrastructure and operations.
However, since this is mostly a digital service, these costs are relatively low compared to the potential revenue it can generate.
5. Credit Risk and Defaults
Another cost lever is managing the risk of loan defaults. If businesses can’t repay their loans, it directly impacts OfBusiness’s bottom line.
6. Delivery Costs
Finally, OfBusiness offers transportation services to ensure that materials reach their customers on time and in good condition. This adds to their costs but also helps them provide better service and avoid issues like delays or theft.

Market Opportunity 💡

1. Labour Problems in MSMEs
The MSME sector in India is vast, employing around 460 million people and contributing 30% to the GDP.
However, these enterprises struggle to attract skilled workers due to their limited brand recognition and inability to offer competitive salaries.
OfBusiness can leverage this challenge by providing recruitment and training services as part of its offerings, helping MSMEs access the talent they need while expanding its service portfolio.
👩🏻‍💻
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2. Insurance Coverage Gaps
💡
The total addressable market for SME insurance in India is estimated to be between 1.5 lakh crore and 1.8 lakh crore
With 85% of MSMEs in India uninsured, there is a significant opportunity for OfBusiness to expand its financial services by introducing insurance products tailored to the needs of small and medium enterprises.
By addressing this gap, OfBusiness can help MSMEs mitigate risks, such as payment defaults and supply chain disruptions, while unlocking a new revenue stream in a largely untapped market.
💡
The depth you see here is just a feeler of the depth we teach at GrowthX 💫 GrowthX is an invite-only club of over 3000 members who are product, marketing, and business leaders, and founders from top internet-first companies like Google, Canva, CRED, Stripe, Netflix, and more 💎 We teach our members how to scale revenues via frameworks that can be applied starting next Monday morning. The GrowthX Membership is built on 3 core pillars:
1. Learning experience: Where you learn the science of revenue-led growth with frameworks actionable the next Monday morning. 2. Curated community: Where you access a safe space for you to soundboard anything that is stressing you at work.
3. Career outcomes: Over 35% of members are founders & are able to hire growth teams to scale revenue for their companies while operators are able to get into breakout leadership roles. Explore GrowthX Membership 🏆

Challenges ‼️

1. Geopolitical Issues
Supply chain disruptions due to geopolitical tensions or civil unrest can significantly impact businesses, especially those reliant on critical raw materials.
For OfBusiness, which operates in sectors like construction and manufacturing, these disruptions could lead to delays, increased costs, and potential reputational damage. Navigating these challenges will require robust risk management strategies and diversified sourcing.
2. Credit Risk
Operating in the lending space inherently involves credit risk, particularly when extending credit to SMEs, which are often vulnerable to market fluctuations and economic downturns.
For OfBusiness, managing this risk is crucial to maintaining the health of its loan book.
If a significant portion of its borrowers were to default, it could lead to substantial financial losses and impact the company’s overall stability.
3. Scrutiny Over Questionable Practices
OfBusiness has been under scrutiny for allegedly engaging in questionable practices involving employee-linked entities.
These entities reportedly buy and sell steel through OfBusiness subsidiaries, creating a cycle that inflates revenue figures. This practice raises concerns about the transparency and accuracy of OfBusiness’s financial reporting, especially as it prepares for an IPO.
Discontinuing these activities could lead to a significant drop in revenue and operating profits, posing a major challenge to maintaining investor confidence and ensuring a successful public offering.
📌
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