[Funding Alert] Udaan raises investment of $585 M led by Tencent, Altimeter, Footpath Ventures, Hillhouse, GGV Capital, and Citi Ventures

Udaan, the Bengaluru-based B2B ecommerce platform has raised funding of $585 million led by Tencent, Altimeter, Footpath Ventures, Hillhouse, GGV Capital, and Citi Ventures. The round also saw participation from existing investors Lightspeed Venture Partners and DST Global.

With this fund raise, Udaan’s valuation is now believe to be $2.5 billion to $3 billion. Since 2016, Udaan has so far raised $870 million in funding. 

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Speaking of the fund raise, Vaibhav Gupta, Co-founder, Udaan said, 

“With this fund raise we will focus on growing the marketplace, going deeper into existing categories, invest in our core capabilities like our tech marketplace platform, fulfilment and delivery, lending and payments. The idea is to build on our core capabilities both in terms of value and strategic advantage. We have a long term to building the business and the capital raised helps us focus on that long term strategic approach.” 

Founded in June 2016, Udaan began its operations a year later and achieved the coveted unicorn status in September last year. So far, it has been one of the few startups to achieve a private valuation of $1 billion in the shortest possible time. 

Martin Lau, President of Tencent, said: “Udaan’s unique approach can enhance the capabilities of millions of retail stores across India. It represents a powerful example of how technology can empower the business of small merchants, improve the efficiency of industries and bring benefits to consumers.” 

Udaan was started by Sujeet Kumar, Amod Malviya, and Vaibhav Gupta, formerly with Flipkart, who realised that technology could be the game changer and believe Udaan’s journey has just begun.

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Focussed on horizontal B2B ecommerce, Udaan currently has operations across lifestyle, home and kitchen, staples, fruits and vegetables, FMCG, toys and general merchandise. The platform currently helps SMEs like small manufacturers, brands, mills, and farmers to sell their products across the country at a low cost. 

Brad Gerstner, Founder and CEO of Altimeter Capital, and Ram Parameswaran, Partner at Altimeter Capital, said: 

“Udaan's experienced team has efficiently built the leading B2B platform in India. Empowering tens of millions of small businesses to more effectively procure and sell goods is not only a massive business opportunity but will help transform the economy by providing internet-scale productivity gains to merchants, wholesalers, and manufacturers. Altimeter is excited to partner with them on this important mission.”

The platform is enabling this business to business (B2B) transaction, bringing together all participants onto a single platform - be it the wholesaler, distributor, producer, and the small retail shop owner. All this comes on a single app on the smartphone.

Udaan also enables these businesses like the kirana store owners, street vendors, pharmacists, small factories and contractors to source from a large selection of high-quality products at low prices. 

Explaining the depth and scale of the market, Sujeet said,

“B2B ecommerce is very India specific. There are unique ways of consumption, distributions. There are more than 50 million SMEs in India. It is both an opportunity and a challenge. There is more effort in building capabilities and learning. But the problem is real and there are lot of inefficiencies in different aspects - logistics, supply chain, capital, sales and marketing. Since 2017, internet has truly opened in India and it has given opportunity to several small businesses to grow. We are using that opportunity to empower them so that they can source better and manage their working capital better.” 

The Indian economy is believed to be driven by the consumption in the retail industry, which is believed to touch $3.6 trillion by 2020. Yet the organised sector is only 10 to 12 percent. 

However, the Udaan team believes this will soon change. “There is whole new generation that is taking charge of the SMEs in India and this is a young population which is technologically savvier and is using technology and digitisation to grow their business,” adds Vaibhav. 

“We are excited to continue partnering with Udaan’s team as they build the leading B2B trade platform across categories in India. Udaan platform enables small businesses in India to finally benefit from the power of internet and technology. At the same time, by reducing supply chain complexity, Udaan is making products more accessible and affordable for consumers across the country,” said Saurabh Gupta, Managing Partner at DST Global. 

Sujeet believes that today the entire supply chain is highly inefficient whether from a logistics perspective or price discovery or other aspects. “Both the producers and the consumers are paid really low or too high. Building a reliable trustworthy supply chain is what gives us the needed advantage,” he says. 

“The market opportunity is turning out to be much deeper than we envisioned when Lightspeed led the company’s Series A financing in 2016 and we’re excited to continue supporting the company while welcoming a strong syndicate of new investors,” said Bejul Somaia, Partner, Lightspeed Venture Partners. 

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