SoftBank may invest $100 mn in e-grocer Grofers to take on BigBasket

SoftBank is planning to invest $100 million in e-grocery major Grofers. The Japanese telecom giant, fast becoming the biggest challenger to Amazon in India, already has investments in the top four unicorns — start-ups valued $1 billion or more — in the country. 

Grofers and SoftBank refused to comment. But, sources close to the development confirmed that negotiations were on to finalise the investment, which would be between $80 million and $100 million. The Gurugram-headquartered start-up is valued at about $400 million.

“SoftBank is keen to invest in the e-grocery space. Grofers has received a nod from the government for foreign direct investment. The new round of funding will help it take on its biggest competitor, Big Basket,” said the source.

Grofers has managed to survive the churn in the sector that started in 2015, leading to the closure of companies such as PepperTap and AskMeBazaar, among others. 

“Grofers managed to keep its cash burn quite low, by cutting back on operations and not expanding unnecessarily during the crunch. It was able to survive on the money it had raised,” said an industry analyst. 

“Now, with most competitors gone, it can seek more money to expand as it badly needs to,” he added. 

Grofers last July secured the final approval from the Department of Industrial Policy and Promotion to sell only food products through offline retail.  Sources said Grofers was also in talks with Amazon India for funds. 

In November 2015, Grofers had raised $120 million from SoftBank, Russian entrepreneur Yuri Milner, as well as older investors Tiger Global and Sequoia Capital. Soon after, it raised another $35 million from Tiger Global Management and Sequoia Capital India. 

Sources said Tiger Global might be let go some percentage of its stake in Grofers in this round of investment, by secondary share sale to SoftBank. The Masayoshi Son-led investment giant will be putting in the money from its $100-billion Vision Fund. 

SoftBank has been hedging its bets in every sector it is investing in India. It entered the country’s start-up space with a nearly $1-billion investment in beleaguered e-commerce player, Snapdeal. Since then, it has cumulatively put in $4 billion in Flipkart and Paytm.

It has also put in money in taxi aggregator Uber and its rival Ola.

While SoftBank has not directly invested in Big Basket, the company operated by Supermarket Grocery Supplies recently raised $300 million in a Series-E round of funding, led by the Alibaba group. 

Alibaba is planning to make Big Basket a major growth driver of groceries for Paytm Mall. SoftBank has invested about $1.8 billion in the firm and is the majority stakeholder.