Udaan, an Indian commerce startup that helps merchants acquire inventory and working finance, has received $250 million to accelerate its growth and prepare for public markets.
Aditya Pande, the Bengaluru-based startup’s chief financial officer, told staff in an internal email viewed by TechCrunch that the company had raised $200 million via a convertible note and another $50 million in debt.
“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. This round was oversubscribed 2x and also saw participation from our existing investors, including those who bought into the company through the secondary (ESOP) round in H1 2021,” he wrote in the email.
The names of the new investors were not revealed in the email, but a person familiar with the situation told TechCrunch that Tor Investment and Arena Investors were among those who had invested. Lightspeed Venture Partners and GGV Capital are among the startup’s existing investors, and it was last valued at over $3 billion. It is currently in talks with a few more investors.
The new financing “reflects our ‘broadening the capitalization strategy’ as we architect our 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. With this note, the total funds raised by Udaan through debt and convertible note through just the last quarter of 2021 has crossed USD 250 Million, setting us up well to continue executing our strategic agenda,” he added.
According to a separate person familiar with the situation, the business, which has Lightspeed Venture Partners and GGV Capital as investors and was last valued at over $3 billion, is in talks with a few more investors and is expected to raise more money in the coming months.
The majority of India’s business-to-business market is still unorganised. As a result, merchants around the country are now required to go to other cities — where all of the large dealers are located — to replenish their inventory. However, because these merchants lack negotiating power, they struggle to get the best value for money and access to a larger inventory.
Udaan, a startup co-founded by three former Flipkart executives, Sujeet Kumar, Vaibhav Gupta, and Amod Malviya, aims to solve this problem by linking small businesses with wholesalers and traders. Coca-Cola, PepsiCo, Boat Lifestyle, Micromax, HP, LG, ITC, HUL, and P&G are among the thousands of companies that have signed on with the firm, which now serves over 3 million merchants and small and medium-sized businesses.
Apart from the inventory issue, Udaan also assists merchants in obtaining operating capital. Small businesses, particularly mom-and-pop shops, rely on the proceeds from the sale of their current inventory to fund the purchase of their next batch. Udaan is able to evaluate who it may safely lend working money to based on the participation of different merchants on the site.