After bouncing back from the Covid-19 pandemic slump, Udaan — the business-to-business (B2B) e-commerce start-up — has raised $280 million in additional financing from its existing and new investors. The existing investors of Udaan — Lightspeed Venture Partners, DST Global, GGV Capital, Altimeter Capital, and Tencent — participated in the funding exercise. Two new investors — Octahedron Capital and Moonstone Capital — also participated.
The investment takes the valuation of the Bengaluru-based company to over $3.1 billion, from $2.8 billion, when it raised $585 million from investors in October 2019, according to sources. The additional financing exercise takes the overall funding raised by Udaan to date to $1.15 billion.
Udaan Co-founder Amod Malviya said the Covid-19 pandemic has accelerated the digital-led evolution of a highly fragmented and unorganised Indian trade and retail industry. He said the pandemic also highlighted the unique structure of the Indian economy, with millions of kiranas and neighbourhood stores becoming the lifeline of the country at the time of crisis.
“Udaan is at the forefront of this uniquely Indian e-commerce opportunity, emerging in the past four years as one of the largest e-commerce platforms in India, while taking an India-first mobile-first approach to e-commerce,” said Malviya.
An alumnus of IIT-Kharagpur, Malviya was the chief technology officer of Flipkart before he quit the firm in 2015. He is considered to be the one who built Flipkart’s technology backbone.
“This financing enables us to further our journey of taking e-commerce to the depth and breadth of the country, with Udaan’s unique low-cost model for core middle India,” said Malviya.
The additional funds will be deployed towards continued market creation of B2B e-commerce in India. This includes reaching out to more small businesses across the country and bringing benefits of e-commerce to them. Some of the key areas of investment include continued expansion of selection of products and categories available on Udaan and furthering user experience. The firm will also enhance the technology platform, expand small and medium enterprise financing capabilities, and reinforce the supply-chain infrastructure.
The Indian market has a large number of small and medium businesses across both manufacturing and trade. This includes millions of farmers, traders and retailers. Mobile technology is enabling access for these businesses at an unprecedented speed. It is creating a unique opportunity to leverage the internet to bring scale and professionalization to both supply and trading e-commerce, that is native-fit for the Indian market. Udaan’s marketplace has strategically focused on this trend, facilitating efficient and convenient transactions. It is enabling low and best price, highest quality and widest selection to its network of over 3 million users in 900 cities by connecting them to over 25,000 sellers across the country.
The year 2020 posed one of the biggest leadership tests for three friends and former Flipkart executives, Amod Malviya, Sujeet Kumar, and Vaibhav Gupta, who founded Udaan, in 2016. After raising $585 million from marquee investors in October 2019 and gaining recognition as India’s fastest-growing unicorn, Udaan’s business model found itself severely disrupted by the Covid-19 pandemic. At one stage during the lockdown, Udaan is learnt to have lost almost 60 per cent of its business. It had to lay off 10-15 per cent of its contract staff, leading to the loss of around 3,000-3,500 jobs. But the founders and their team have been able to pull Udaan out of the carnage.
Udaan has products across categories such as lifestyle, electronics, home and kitchen. The other categories are staples, fruit and vegetables, fast-moving consumer goods (FMCG), pharma, toys, and general merchandise.
Today, the transaction volume of Udaan’s food business comprising FMCG, staples and fresh products has crossed 8,000 tonnes per day. This makes Udaan the largest grocery platform in the country. The volume is greater than the daily food consumption of countries such as Singapore, Denmark, Finland, and Norway. The booming online retail sales last year showed that smaller cities and rural areas of the country are now a key market for e-commerce companies, including Udaan.