Udaan, India’s largest business-to-business (B2B) e-commerce platform, has raised $250 million via convertible note and debt. The Bengaluru-based firm has raised $200 million via convertible note, which is a short-term debt that converts into equity. The move is expected to help udaan to create an interim event and set the stage to go public in 18 months and give a boost to its valuation 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, the 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 and glad to share that we have 5 new marquee investors coming onboard the udaan juggernaut, as part of our recently concluded convertible note financing,” said udaan chief financial officer Aditya Pande, in a mail addressed to the employees and which has been seen by Business Standard. “This round was oversubscribed 2x and also saw participation from our existing investors, including those who bought into the company through the secondary (ESOP or employee stock ownership plan) round in H1 2021.”
A convertible note is an instrument typically used by companies at pre-IPO stage, and the instrument converts into equity at the IPO. Large scale 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 and thereafter. “With this convertible offering, we, as a company, have started building a complete new muscle in our finance function - which we will continue to strengthen as we go forward,” said Pande.
He said the total funds raised by udaan through debt and convertible note through just the last quarter of 2021 has crossed $250 million. “This is setting us up well to continue executing our strategic agenda,” said Pande.
Last year in September, udaan, appointed co-founder Vaibhav Gupta as CEO. This is part of the plan for the next phase of growth for the Bengaluru-based company. The firm had said this is in line with the evolution needed to become a publicly listed entity in 18-24 months and become a best-in-class large global public company.
The other two co-founders, Amod Malviya and Sujeet Kumar, as Board members will actively work with Vaibhav Gupta to ensure that the organisation effectively transitions to a CEO-led structure for continued success and achieve their shared vision for the organisation.
Udaan competes with e-commerce giants such as Amazon India, Flipkart, Reliance’s JioMart and the Tata group for a share in the grocery market. It is eyeing the grocery market to be worth $850 billion by 2025 and is focusing on community grocery e-commerce (CGE) to tap the sector growing sharply in the pandemic, according to the sources.
Last year, udaan’s food and FMCG business grew 95 per cent year-over-year in October, helped by its ‘Mega Bharat Sale’ for small retailers. The FMCG business witnessed a YoY growth of over 115 per cent with major demands coming from Bharat.
During the festive month, the platform witnessed a 75 per cent jump in retailer participation and over 90 per cent repeat purchase coming from existing buyers. The platform also witnessed major participation from buyers from Tier 2, 3 cities with North India leading in overall sales closely followed by South, West and East respectively.
Udaan now has a network of over 3 million registered users about 30,000 sellers across over 900 cities in the country covering more than 12,000 pin codes. The platform has over 2 million retailers, chemists, kirana shops, HoReCa, farmers, etc. doing over 5 million transactions per month. The company operates one of the largest logistics networks with over 200 warehouses spread over 10 Mn Sq Ft space across the country delivering over 8000 tons of products everyday. To cater to the growing demand, Udaan plans to scale its warehouse capacity to 50 million square feet across the country in the next 7-8 years.
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