IFC leads $110-M fundraising for local start-up helping MSMEs

MANILA, Philippines — An e-commerce start-up that helps small businesses like sari-sari stores and carinderias go digital is set to expand its operations after securing fresh funds from investors that included the World Bank Group’s private sector arm.

GrowSari received $77.5 million following a new round of fundraising activity that included investments from the World Bank Group’s International Finance Corporation (IFC) and global investment firms KKR and Temasek Group.

Founded in 2016, GrowSari is a business-to-business (B2B) platform that supports small physical retail stores in the Philippines with tools to manage and grow their business. Currently, GrowSari offers services including telco loading and bills payment for local stores, while equipping micro, small and medium enterprises (MSMEs) with credit to ease working capital constraints.

GrowSari plans to leverage funding to accelerate its national expansion. From a base of 1,000 sari-sari stores in three cities back in 2018, Growsari has grown to service more than 100,000 stores in over 220 municipalities across Luzon.

In a statement on Monday, IFC said the fresh investments in GrowSari brought the total funding for the firm to around $110 million, the largest amount ever in the B2B and MSME space in the Philippines.

It was also the biggest funding of its kind in the region.

“We have already launched in the Visayas, with Iloilo as the first city, and we will launch in Mindanao soon,” Siddhartha Kongara, chief technology officer and co-founder of GrowSari, said.

Explaining its investment in GrowSari, IFC highlighted the crucial role of MSMEs to the economy and how they were badly hit by the pandemic. Government data shows small and medium businesses account for over 90% of enterprises in the Philippines and 63% of total employment.

IFC explained that informal retailers face a range of challenges due to inefficient and fragmented supply chains, which can be solved by spurring adoption of digital platforms.

That said, IFC hopes that its investments in GrowSari would not only expand digital adoption among MSMEs but also help the company develop an accurate credit scoring model. This, the IFC said, will accelerate access to credit for stores, spur financial inclusion and promote gender parity as more than 75% of these stores are female owned.

"Businesses that ignore digital technology put themselves at an immediate disadvantage,” Stephanie von Friedeburg, IFC's senior vice president, said.

“Our investment will enable Growsari to expand digital adoption and financial services for MSMEs, which is critical to keep them competitive, and for a resilient and inclusive recovery,” Friedeburg added.