 "$340 million fundraise by Udaan signals pick-up in startup dealmaking")
Udaan, India’s largest business-to-business (B2B) e-commerce firm, has raised $340 million in Series E financing to signal a slow return of deal momentum amid tight liquidity conditions and a global economic slowdown.
Udaan’s fund is the third largest raised by a company in a single round for 2023. Fintech firm PhonePe raised $850 million this year, which included a single round of $350 million from General Atlantic in January and subsequent funding of $100 million in May.
Eyewear startup Lenskart raised $500 million from Abu Dhabi Investment Authority in March and $100 million from ChrysCapital in June. Ola Electric raised $380 million in October, although $240 million of this comprised debt.
In the last few weeks, there has been an improved momentum in fund-raising. For instance, Vegrow, a B2B fruit marketplace, raised $46 million in Series C and digital lender Aye Finance raised Rs 310 crore in Series F funding.
Prior to the latest round, Udaan had raised $1.52 billion from investors. Udaan’s Series E funding round was led by M&G plc, with participation from existing equity investors Lightspeed Venture Partners and DST Global. It is subject to regulatory approval.
The funding, which included a combination of fresh equity investments as well as the conversion of existing debt (convertible notes) into equity, will strengthen Udaan’s balance sheet.
The company didn’t reveal if the funding had changed its current valuation of $3.1 billion. According to industry sources, it is likely to be less than the current valuation due to macroeconomic uncertainty.
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Udaan said its business is fully funded and on course to achieve its objective of becoming profitable in the next 12–18 months.
“Series E round strengthens our balance sheet and fully funds our business plan. It enables our continued journey of growth and profitability, positioning us well to be public market-ready in the next 12–18 months,” said Vaibhav Gupta, co-founder and chief executive officer, Udaan.
Business Standard had first reported in September that Udaan was in talks with M&G, Lightspeed, and others to raise funds.
The fresh funding is also expected to help Udaan compete with players such as Amazon, Flipkart, and Reliance’s JioMart in the B2B e-commerce space. This segment is expected to surpass sales of $125 billion by 2027, expanding at a compound annual growth rate of 45 per cent, according to a report by Avendus Capital.
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 on its business strategy and business model while following the “efficiency with excellence” agenda.
“M&G is pleased to support Udaan as it pursues a profitable growth strategy,” said Niranjan Sirdeshpande, (Europe, Middle East, and Africa) director, M&G Catalyst.
“We believe it has the right operational platform to be the trusted partner of scale for small businesses across India by empowering them with technology, financial inclusivity, and supply-chain capabilities,” he added.
Udaan plans to use these funds to strengthen customer experience, market penetration, strategic vendor partnerships, and to reinforce long-term capabilities of supply chain and credit. It aims to build a sustainable business that serves millions of shopkeepers and kiranas across India.
“We continue supporting Udaan as it further strengthens its leadership as India’s largest EB2B marketplace,” said Bejul Somaia, partner, Lightspeed Venture Partners.
“We believe this financing puts the company on an extremely strong financial footing and on course to further improve profitability while empowering small businesses across Bharat,” he added.
Over the past 12 months, Udan has seen strong and steady validation of its multi-category cluster-anchored business strategy, the company said. Udaan is now reinforcing it with a regional cluster-led operating organisation that enables strong execution while promoting ownership and accountability to drive growth.