Udaan's valuation shrinks by 43.5% to $1.7 billion in Series E round

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Business-to-business (B2B) e-commerce company Udaan’s valuation has fallen by about 43.5 per cent to around $1.75 billion in a down round (post-allotment of Series E round), according to people familiar with the development. At its peak, the Bengaluru-based unicorn was valued at $3.1 billion in January 2021.

In December 2023, Udaan raised $340 million in Series E financing amid tight liquidity conditions and a global economic slowdown. The funding round was led by M&G plc, with participation from existing equity investors Lightspeed Venture Partners and DST Global.

“The company is focusing on profitability, cost optimisation, and an increase in efficiency to be IPO-ready by next year,” said a person.

The funding, which included a combination of fresh equity investments as well as the conversion of existing debt (convertible notes) into equity, will also strengthen Udaan’s balance sheet. Business Standard had earlier reported in December that Udaan’s valuation after Series E financing was less than the current valuation due to macroeconomic uncertainty.

Udaan had said its business is fully funded and on course to achieve its objective of becoming profitable in the next 12–18 months.

Last year, Udaan raised $350 million in convertible notes and debt from shareholders and bondholders, with no change in valuation.

Udaan was valued at $3.1 billion in its last equity funding round of $289 million in January 2021 from existing and new investors.

Over the past two years, Udaan said it has made consistent progress on its sustainability agenda, with eight consecutive quarters of improving profitability. This was driven by interventions in its business strategy and business model while following the “efficiency with excellence” agenda.

Over the past 12 months, Udaan has seen strong and steady validation of its multi-category cluster-anchored business strategy. Udaan is now reinforcing it with a regional cluster-led operating organisation that enables strong execution while promoting ownership and accountability to drive growth.

Udaan recently laid off about 120 employees, or 6 per cent of its workforce of 1,600, as part of its focus on profitability. In November 2022, Udaan laid off 350 employees across department functions in a move to drive cost efficiency. Before that, in June 2022, the firm sacked 180 employees.

Udaan’s gross merchandise value (GMV) decreased by 43.1 per cent to Rs 5,629 crore in the financial year 2022-23 (FY23) from Rs 9,900 crore in FY22, according to media platform Entrackr. The sale of traded goods on the online platform was the primary revenue driver for the company, accounting for 96 per cent of the total GMV. This income shrank by 43.7 per cent to Rs 5,408 crore in FY23. Udaan’s losses contracted 33.7 per cent to Rs 2,076 crore in FY23 from Rs 3,132 crore in FY 22, according to Entrackr.