British International Investment

Smartpaddle Technology Private Ltd

South AsiaManufacturing

“Bizongo” (Smartpaddle Technology Pvt Ltd) is India’s largest integrated B2B platform focused on packaging and unbranded consumables, bringing the highly fragmented manufacturing market of SMEs into a digital supply chain.

Our investment

Description of the investment.

We first invested in the business in 2020 alongside Chiratae Ventures to help scale Bizongo’s business across an additional 1,000 small businesses, sustaining at least 20-30,000 formal jobs for low-income workers in manufacturing SMEs in India.

With most suppliers pointing to the lack of good alternatives to Bizongo in the market, we can play an important role in backing an innovative model that is driving efficiencies across the sector while contributing to MSME growth.

We can further play a stewardship role around social and environmental practices, setting standards for the industry and enabling Bizongo to reduce execution, reputational, and negative impact risks as the business expands.

We made a further investment in the business in 2021 and 2023.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact

Sustain income generating opportunities (SDG 8.5).

How?

How?
  • Direct: By aggregating small-scale manufacturers on its online platform, Bizongo enables better market access for these small businesses, additional demand, and efficiencies (better capacity utilisation, planning, and faster working capital) fuelling business growth. Bizongo’s main manufacturing partners have experienced more than 150 per cent year-on-year revenue growth since doing business with Bizongo. More than 65 per cent of suppliers report improved growth in customers and sales due to Bizongo.

Who?

Stakeholder Geography Characteristics
Suppliers, their employees

Pan-India: 24 Indian states out of 36 (including Union territories)

  • Mainly unskilled workers within the bottom 43 per cent of the population.
  • More than 80 per cent of suppliers employ female employees, where they make up 25 per cent of the workforce.

How much?

Scale Depth/Duration

Additional 1,000 manufacturing partners across India, indirectly sustaining an additional 20,000 to 30,000 workers.

50 per cent of surveyed suppliers report improved business outlook due to Bizongo and report paying their workers more than similar businesses. A majority of the unskilled workforce is made up of contractual labour, who work at these firms for 2-3 years on average. Employees in managerial or administrative positions tend to stay on for longer, with some reporting over 10 years and some reporting as many as 20 years of employment

Contribution/additionality

Contribution/additionality
  • Financial additionality: The commercial market does not offer capital in sufficient quantities to meet the company's plans or needs. The round would be smaller without our co-investment, which could affect the expected scale of impact.

Grid score

Grid Score

To help us direct our investments, we previously used a tool called the Development Impact Grid. It scored investments out of four, based on two factors: the difficulty of investing in a country and the propensity of the sector to generate employment. This tool was used for investments until the end of 2021. Since 2022 it has been replaced by the Impact Score.

This investment is made under an approved Catalyst Strategy, and therefore does not require a grid score.

Risk

Execution Risk
  • Relates to the risk of Bizongo not being able to scale up their network expansion across new geographies and business lines beyond packaging. This risk is aligned with commercial risks and can be mitigated through CDC and Chiratae’s strategic value-add.
Unexpected Impact Risk
  • Relates to the risk of some manufacturing partners failing to deliver quality employment conditions for workers and having a negative climate impact (e.g. water pollution). Risks are not correlated with commercial risks and will be mitigated through partners’ Environmental and Social Management Systems.
Alignment Risk
  • Risk of impact not being entirely correlated with future business strategy and growth, impairing ability to reach low-income workers at scale. As the fragmented nature of the Indian market is unlikely to change in the next 10-15 years, Bizongo’s competitive advantage will remain focussing on MSMEs, sustaining our impact thesis. The medium-term risk to any change is believed to be low.

Environmental and social information

  • Environmental and social summary

    A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.

  • Environmental and social risk

    A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.

Environmental and social summary

The E&S risk categorisation is medium-low (B). As part of the 2023 fundraise, BII will support Bizongo to implement a value-add programme to improve E&S practices in its vendor base.

Environmental and social risk

Medium-Low

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to [email protected] or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at [email protected]

  • Key facts

    First published

    When the investment was first published on the website database.

    :
    January 2024
    Last updated

    When the last quarterly update of the website database occurred.

    :
    June 2024
    Project number

    An identifier number shared by investments in the same project.

    :
    D5306
    Status

    The current status of the investment (green flag for active and red flag for exited).

    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.

    :
    South Asia
    Country

    The countries where the investment delivers impact. Where impact is delivered in multiple countries, this is indicated.

    :
    India
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Manufacturing

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.

    Investment type :
    Equity
    Start date :
    September 2023
    Amount :
    $2.39m
    Currency of investment :
    INR
    Domicile

    The company or investment fund’s place of incorporation.

    :
    India

Related investments made by BII into this company:

Investment name Commitment Region Sector Start date Status
Investment 01 $3m South Asia Manufacturing December 2020 Active
Investment 02 $17.38m South AsiaSouth Asia Manufacturing December 2021 Active

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