Singapore-based SC Ventures plans to divest its stake in B2B company

Singapore-based SC Ventures, a wholly-owned subsidiary of Standard Chartered Bank, is looking to roping in potential investors in SOLV, its B2B e-commerce platform for micro- and small-scale enterprises in India.

 

According to sources, the platform, set up last September, hopes to hit the unicorn status ($1 billion) by the mid-third quarter of next year. The bank is also looking at re­p­licating the platform ac­ross other markets in Afr­ica and south east Asia with India being the first market where it is being tested. The platform bri­ngs mi­cro- and small-scale enterprises together to showcase and sell their products to a whole range of buyers, expand their limited reach, and support them with credit lines which traditional banks keep away from. In many ways, SOLV competes with firms such as Udaan, ano­ther B2B platform, which also links buyers with sellers and is currently valued at $3 billion.

 

Jiten Arora, global head for SME partners in SC Ventures said the bank has done a series of inv­estments and there are enough commitments from them to scale up.

 

“But now we are going to a stage when we have proven the hypothesis that the model makes a difference to the micro and small scale sector so we are starting to talk to strategic as well as financial investors to come on board who have a similar vision. However, considering the stated conviction of the bank in this area, unlike start-ups, we will always have a majority,” said Arora. He added that the bank is currently determining the valua­tion of the company.

 

SC Ventures was set up by the bank to look at alternative business models to undertake conventio­nal businesses in banks which are highly regulated. It is also plann­ing to enter the digital retail ban­king space. Also in the wo­rks is an entry into susta­inable finance that includes launching green bonds and sustainable credit finance to corporates.

 

“Our bank is big in the emerging markets. SC Ventures runs digital retail banking in Hong Kong, Singapore, Indonesia, and India is on the road map too. We run our largest conventional bank in Hong Kong but the digital bank has been set up as a disruptive business model. We also see a large market in India for green bonds,” said Arora.

 

The aim of SOLV is to rope in over five million micro and small-scale enterprises onto its platform with a gross transaction value hitting $3.5-$4 billion by 2025. By 2021-end, it hopes to hit over 200,000 enterprises (currently it is at 65,000) with a gross transaction value of $100 million.  The firm is in 65 cities and over 15,000 pin codes. 

Arora said the size of the transaction is depe­ndent on the category in which one operates. They started only with FMCG, hospitality, and catering and this year have expa­nded to mobile devices, accessories and apparel. By 2025, this will grow to six categories. Its per tra­nsaction size is currently around Rs 8,500.

 

Of course, SC Ventures expects that SOLV will break even much faster than pure play B2B e- commerce companies which currently take 8-10 years. That is because, unlike many of the competitors, it also offers finance and other business services (support on GST, ERP solutions, helping them in digitizing the business etc).

 

“We have tied up with 10 partners instead of being captive to one and these include large NBFCs as well as new age fintechs to offer finance. Our expectation is that we will be able to break even by 2024,” said Arora.

 

He also said that, unlike many start-ups whose only focus is on valuation which leads it to faster scaling up, SOLV is focusing on a more sustainable model where breaking even is faster.

 

Why does it have a separate venture for digital retail banking which is separate from the bank? Arora explains the logic:  A lot of digital play is happening in the bank both in retail and well as corporate to fire up the conventional business, he said.

 

“What SC Ventures does is offer an alternative business model in the same business which a bank, due to regulations, cannot do. These are new platform businesses which banks cannot do,” he said.