Udaan, an online marketplace that caters to small businesses, is close to raising around $500 million in fresh funds, which is likely to almost treble the company’s valuation from its previous round to $2.2 billion, pre-money, three people privy to the deal talks said. Post the investment, Udaan’s valuation will go up to $2.7 billion.
Existing backers Lightspeed Venture Partners and Yuri Milner’s DST Global are leading the financing round, while new investors including Hillhouse Capital and Altimeter Capital are likely to participate, the people said.
Chinese internet giant Tencent has also held discussions with Udaan for a possible capital infusion, another person in the know said.
Udaan, founded by former top Flipkart executives Vaibhav Gupta, Amod Malviya and Sujeet Kumar, is estimated to be doing clocking $1.2 billion in annual gross merchandise value or GMV.
Apart from being a platform for retailers and wholesalers, it has already started underwriting loans for these small businesses after it received a non-banking financial company (NBFC) licence.
Silicon Valley venture fund Lightspeed, an early investor in companies like ephemeral messaging app Snapchat, will invest in Udaan through its US unit, with DST being a co-lead, sources indicated. Lightspeed was the first institutional investor in the Bengaluru- based company in 2016.
“The transaction is likely to close in the next few weeks with Lightspeed and DST Global doubling down on the company,” said a source who did not want to be named as discussions are private.
One of the buzziest startups in India, Udaan, which is an e-marketplace to facilitate purchase of goods by retailers, small- and medium-sized wholesalers and traders, had also held talks with multiple other investors in the past few months, including Naspers, SoftBank Vision Fund, Tiger Global and Sequoia Capital, said sources privy to the goings-on. These talks fell through as some investors thought the valuation ask was too steep.
Emailed queries to Udaan, Lightspeed, DST Global, Hillhouse, Tencent and Altimeter Capital did not elicit a response till the time of going to press.
“Udaan has been burning around $15 million cash to scale extensively, and they want to grow aggressively as they expand supply chain and credit businesses,” said one person aware of the deal, adding that the investment will help keep its growth momentum.
The company raised a $225 million financing round in September last year, led by DST Global and Lightspeed Venture Partners. It valued the less than three-year-old company at $1 billion, making it one of the fastest to snag the unicorn tag.
Aside of a slew of startups tapping the massive opportunity in the SME wholesale business, Mukesh Ambani’s Reliance industries has also identified this segment as key for its online commerce business with the launch of Jio Prime Merchant.
Udaan connects retailers and sellers to buy directly from large manufacturers across multiple categories including apparel, electronics, pharmacy, staples and FMCG.
Most B2B companies in India have focused largely on one vertical to scale business, including Tiger Global-backed Ninjacart, which targets fresh fruits and vegetables and Nexus Venture Partners funded Jumbotail, which has zeroed in on staples and FMCG for kiranas.
Udaan, however, has chosen to build a horizontal platform across categories. It also offers services including credit, logistics, SaaS, marketing, sales and distribution. Udaan’s revenue for fiscal FY 2018 stood at Rs 6.5 crore, regulatory filings show.
The company’s other business entities includeHiveloop Capital, offering credit, Hiveloop Technology which runs the core marketplace business and Hiveloop Apps for payment solutions, according to regulatory filings. The company’s parent entity Trustroot Internet is based in Singapore.
The current channels for trade in India have multiple pain points for both buyers and sellers which marketplaces like Udaan, Ninjacart, Jumbotail, BigBasket, Amazon, Reliance and other players like Metro Wholesale India, and IndiaMart are solving. Investors told ET that the opportunity to dis-intermediate the middlemen, and tap into the big basket sizes, and repeatability in purchases makes the sector attractive for investment.