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Online grocery retail store LocalBanya.com is all set to begin 2015 on a high note as the company is understood to be in the final stages of raising around $20 million in a Series B funding, which will see participation from existing and new investors.
“Term sheet for the fund raising has been signed, and the announcement is likely to be made by the end of this month,” persons familiar with the development told Business Standard. “Unlike its earlier rounds, the company is raising funds from venture capital players this time. This would be a significantly larger round.”
They added that the existing investors of the company are unlikely to participate in the next round.
Founded in 2012, the startup had last raised funds in January 2014, when it received an investment of $5 million from Mumbai-based realty development group Karmvir Avant Group. In 2013, LocalBanya.com had raised an undisclosed amount of investment form Bennett Coleman & Company Limited’ Springboard fund. Prior to this, the company had also received angel funding from a few investors.
LocalBanya.com has been talking about raising more funds since September 2014, as the company is looking to expand its presence outside Mumbai and also to compete with players like the well-funded BigBasket.com. LocalBanya.com has in the past said that it wishes to penetrate into metros, tier-II and tier-III cities.
According to a senior company source, LocalBanya.com has set a target of expanding to seven cities within 2015, starting with Pune. The other cities that are part of the expansion plan, include, Delhi, Bengaluru, Chennai, Hyderabad, Ahmedabad and Kolkata. The fresh round of round of funding will mainly be utilised for this expansion.
According to industry experts, the upfront expense of entering a new city includes setting up logistics, last mile infrastructure and deployment of technology platforms.
“This is the right time for bringing in the funds, because LocalBanya.com now has the technology and infrastructure to support the expansion that’s being planned,” the company source quoted above said on condition of anonymity.
LocalBanya.com currently carries out about 850-900 deliveries per day in Mumbai with an average ticket size of Rs 1,600. The portal offers over 14,000 products, and is focused on rapidly adding to this. The company, which has collaborated with cash and carry infrastructure, may also be looking at strategic partnerships with offline retailers as they expand in the $500-billion food and grocery retail market in India.
With rapid penetration of smartphones in the country and convenience playing a major role, consumers have been increasingly taking to online retailing. While apparel and technology are currently two of the largest segments in online retailing, groceries are also being accepted by consumers in a big way.
