Bengaluru:Udaan, a business-to-business e-commerce platform, has raised $280 million in fresh funding from existing investors, including Lightspeed Venture Partners, DST Global, GGV Capital, Altimeter Capital and Tencent, alongside new investors Octahedron Capital and Moonstone Capital.
The Bengaluru-based startup unicorn will utilise the funds to capitalise on growth in the B2B e-commerce market, driven by increased digital adoption by small and medium businesses due to the Covid-19 pandemic, it said.
It will also invest in expanding its selection of products, growing its SME financing capabilities and strengthening its supply chain infrastructure.
“Covid-19 has accelerated the already fast digital-led evolution of the highly fragmented and unorganized Indian retail industry. At the same time, the pandemic also highlighted the unique structure of Indian economy, with millions of kiranas (corner stores) and neighbourhood stores becoming the lifeline of our country at the time of crisis,” said Amod Malviya, cofounder of Udaan.
The new capital will allow Udaan to take e-commerce across India, Malviya said, adding it will continue to focus on servicing the largest segment of consumers in the country.
Udaan, which connects small and medium sized retailers with manufacturers and vendors, said it has a network of three million users and 25,000 sellers across 900 cities. It deals with goods in the lifestyle, electronics, home and kitchen, staples, fruit and vegetables, FMCG, pharma, toys and general merchandise categories.
“Participation of existing and new investors in this financing highlights the increasing recognition of capital markets of this unique nature of the Indian market, and the opportunity it offers,” Malviya added.
The investment in Udaan comes at a time when the space for servicing small retailers — which still make up a bulk of retail in India — through digital channels has found significant traction. The entry of Reliance Industries through Jio Platforms, Amazon, and the consolidation of Walmart’s India wholesale business with Flipkart is driving competition in the sector.
Moreover, businesses such as Walmart and Flipkart-backed Ninjacart, that service the B2B market for farm produce, are growing at a rapid pace. Spending on food and grocery continues to dominate India’s retail spending, making this yet another subset of B2B e-commerce that is growing fast.
Other consumer-facing marketplaces such as BigBasket and Grofers are also working to expand their B2B businesses to service corner stores.