Udaan raises $250 mn via convertible note and debt, plans IPO in 18 months

Udaan achieved a valuation of $3.1 bn during its last round of funding of $280 mn in January 2021 from existing and new investors

Udaan, India’s largest business-to-business e-commerce platform, has raised $250 million via convertible note and debt.

The Bengaluru-based firm mopped up $200 million via convertible note, which is a short-term debt that converts into equity. The mo­ve is expec­ted to set the stage for Udaan to go pu­b­lic in 18 months and give a boost to its valuation at that time.

Udaan achieved a valuation of $3.1 billion during its last round of funding of $280 million in January 2021 from existing and new investors.

According to industry sources, valuation of the latest round of fundraise will be derived at a future date either at the time of the IPO or during the pre-IPO rounds of funding.

“We are excited to share that we have 5 new marquee investors coming onboard the Udaan juggernaut, as part of our recently concluded convertible note financing,” said chief financial officer (CFO) Aditya Pande, in a mail to the employees.

He added, “This round was oversubscribed 2x and also saw participation from existing investors. They include those who bought into the company through the secondary (ESOP or employee stock option plan) round in H1 of 2021.”

A convertible note is an instrument used by companies at the pre-IPO stage, and it converts into equity during the IPO. Largescale tech companies that have successfully used convertible notes include Airbnb, Uber, Spotify and Robinhood.

This reflects Udaan’s “broadening the capitalisation strategy” as it architects its journey for public markets. “With this convertible offering, we, as a company, have started building a complete new muscle in our finance function. We will continue to strengthen this as we go forward,” said Pande.