The UK retail bank M&G’s investment arm has taken the lead in a $340 million funding for Udaan, a rising star in India’s business-to-business e-commerce scene. This marks one of the largest financing rounds secured by an Indian startup in 2023.
Based in Bengaluru, Udaan’s main focus is on assisting merchants in smaller Indian cities and towns with obtaining inventory from major brands and accessing working capital. The company has announced that the new funds raised also include some convertible debt.
Notable existing backers of Udaan, Lightspeed Venture Partners and DST Global, are also participating in this round, which is awaiting regulatory approval. Udaan’s competitors include heavy hitters like Mukesh Ambani’s massive Reliance Retail, which boasts a $100 billion valuation and currently holds the position as India’s largest retail chain.
This latest influx of funding, Udaan’s first with equity since 2021, ensures that the startup is “fully funded” and on track to becoming profitable within the next 12-18 months. With an eye toward an initial public offering in 2025, the seven-year-old company has been in consultation with bankers to ensure readiness.
The specific valuation given to Udaan by M&G and other investors is not known at this time; however, in 2021, the company was valued at $3.1 billion post-money.
The Series E funding round is a huge victory for Udaan, especially considering the last two years have been focused on cutting costs and increasing efficiency.
– Udaan Founders
Udaan was founded by three former Flipkart executives and was led by all three until 2021, when Vaibhav Gupta was promoted to the role of the startup’s first chief executive officer. With notable players like Ambani’s conglomerate, Jeff Bezos’ Amazon, and Walmart’s Flipkart in the game, along with a myriad of FMCG brands and lenders, countless companies in India are striving to cater to the vast network of kirana stores. These small, independent stores are crucial to the nation, spread throughout thousands of cities, towns, and villages.
Traditionally, these stores and their suppliers have relied on small, localized wholesaler networks that are relationship-based and costly to maintain. Even some of the largest brands like Unilever, with its strong distribution network, only reach a small fraction of the country’s hundreds of thousands of villages, cities, and towns.
Udaan works with thousands of sellers and connects them with over 3 million retailers, allowing these smaller merchants access to high-quality and dependable products across various categories, including grocery, fruits and vegetables, FMCG, lifestyle, electronics, home and kitchen, and pharmaceuticals.
The company proudly boasts a reach that extends beyond 1,200 cities in India for daily delivery, covering over 12,500 zip codes through a highly efficient and streamlined supply chain system. Udaan also offers working capital solutions to small businesses, freeing them from the burden of chasing customers for payment, which often occurs at the end of the month or even later.
“Our Regional Operations strategy will bring us closer to our customers while streamlining and improving our operations.
– Vaibhav Gupta, CEO of Udaan
Gupta also stated, “We are committed, as always, to our mission of empowering small businesses in Bharat (India) while unlocking the incredible and uniquely Indian market opportunity for eB2B worth over $100 billion.” With further developments and news to come, Udaan is a company worth keeping an eye on.
