Online grocer BigBasket raises Rs 45cr from Trifecta Capital in venture debt

Online grocery market leader Big Basket has confirmed the news of it raising Rs 45 crore from Trifecta Capital in venture debt. According to a press release from the company, the funds will be used to meet the capital expenditure requirements of the company, including setting up new warehouses, strengthening the cold chain, and setting up facilities for reprocessing of fruits and vegetables. A report in Livemint today says the company is in talks to “a host of investors to raise at least $100 million (about Rs 650 crore)”.

Hari Menon, CEO and Co-Founder of Big Basket, noted in the release, “We have a clearly identified use case for debt. A significant part of our business is fresh fruits and vegetables, the bulk of which is sourced directly from farms. It is crucial that we maintain the quality right upto the last mile. We are in the last leg of a pilot which will ensure that all fruits and vegetables are maintained at constant temperature and there by improve shelf life of the produce by almost 10 days. This will be done using large scale equipment such as pre-coolers and ventilators. Funding such capex requirements is best done through debt.”

Vipul Parekh, Co-founder and CFO, Big Basket, added that venture debt is much cheaper than equity, and will help reduce overall cost of capital. Also, it comes without any end-use restrictions.

Launched in 2011, the Bengaluru-based company is now present in 25 cities. Bessemer Venture Partners, Helion Venture Partners and Zodius Capital are among investors in the firm, which has raised $220 million in total funding.

Founded by Hari, V Sudhakar, Vipul, VS Ramesh and Abhinay Choudhari, Big Basket today has over four million registered customers, 2.5 million transacting customers, and sales of Rs 150 crore per month. In an earlier interaction with YourStory, the firm said it is targeting $1 billion in revenue by 2020.

“Unlike other online grocery businesses, Big Basket is a full-stack player, and has already broken-even in some of the key markets, like Bengaluru and Hyderabad. Besides, they are backed by very high quality and deep-pocketed investors. We are excited to be part of their growth story,” said Nilesh Kothari, Co-Founder, Trifecta Capital, said in the press release.

Private labels have also worked well for Big Basket in a category as FMCG, where it is tough to make profits. About 15 percent of its revenue comes from Big Basket’s private label staples, and it aims to make it 45 percent.