B2B marketplace Udaan is set to raise as much as ₹4,000 crore to fund expansion as more retailers and wholesalers embrace digital commerce, two people directly aware of the plan said.
Udaan is likely to close the funding round in the next few weeks, the people cited above said, requesting anonymity.
The fundraising will value the startup at $4.5-5 billion, one of the two people said. “There is an unprecedented demand to add capacity as customers are migrating to e-commerce platforms,” the person said. This will be the largest fundraising by the five-year-old Udaan, which has hired Goldman Sachs to manage the process, the person said.
Udaan currently has more than 3 million retailers and 25,000 sellers on its platform, and plans to “double sales volume within a year” by tying up with more sellers, expanding its logistics network and employing technology to grow its business in the pharmaceutical and packaged consumer goods space that has seen a surge in demand in the past year.
Experts said digitization of the retail and wholesale supply chains is likely to outlast the crisis and trigger faster expansion of both customer and business-centric e-commerce platforms. Udaan connects manufacturers with small retailers across food, electronics and fashion and pharmaceuticals sectors.
Online B2B platforms have seen rapid growth in recent years but still form a minuscule part of the overall market. Many retailers and brands started using the platforms during the pandemic as orders could be placed regardless of lockdowns, and they offered assured delivery of goods. Udaan’s food category business soared last year, with transaction volumes crossing 8,000 tonnes per day. Its foods business, which has been contributing 55-60% of total sales, comprises fast-moving consumer goods (FMCG), staples and fresh products.
The company has seen a six-fold jump in food business volume in 2018-20, with the number of buyers rising 50% in the past six months. It has also witnessed a significant increase in repeat purchases from buyers.
In January, Udaan raised $280 million from investors, including Moonstone Capital Partners and Octahedron Capital, besides existing investors Lightspeed Venture Partners, DST Global, GGV Capital, Altimeter Capital and Tencent Holdings. The funding round valued Udaan at over $3 billion.
Udaan also raised $585 million from a clutch of investors in October 2019 at a $2.5-2.8 billion valuation. Udaan was founded in 2016 and turned into a unicorn in about two years, becoming one of the fastest startups to achieve the status. It has raised about $1.15 billion so far.
“Udaan will invest in expanding products and categories on its platform and bring in even better technology to help small and medium enterprises develop financing capabilities and improve supply-chain infrastructure further,” said the second person.
While a Goldman Sachs spokesperson declined to comment, an Udaan spokesperson said, “The details mentioned in your query are completely incorrect. We have no such plans in the near future.”
Udaan’s largest fundraising plan comes when e-commerce giants such as Walmart-owned Flipkart, Amazon and Reliance Industries Ltd-owned JioMart are digitizing neighbourhood grocery stores and strengthening their B2B capacities. For instance, Flipkart launched its digital B2B marketplace Flipkart Wholesale in September last year.
Source: Mint