What does Tiger Global’s $144M investment in DealShare mean for Bharat startups
Jaipur-based social commerce startup DealShare raised $144 million at a post-money valuation of $455 million. The round was led by Tiger Global, WestBridge Capital, Alpha Wave Incubation, and Z3Partners, with participation from partners of DST Global, Matrix Partners India, and Alteria Capital.
DealShare — a Jaipur-based social commerce platform — on Thursday said US-based VC Tiger Global invested $144 million, along with WestBridge Capital, Alpha Wave Incubation, and Z3 Partners.
The round also saw participation from existing investors, including Matrix Partners India, partners of DST Global, and Alteria Capital, while Avendus was the exclusive financial advisor for this transaction.
DealShare will use the funding to invest in AI-driven innovations in its user experience, leading to a highly personalised, fun-filled, and gamified experience.
According to DealShare, this investment means a big win to the social commerce platform and ‘Bharat’ startups.
“We are excited to partner with DealShare as they grow the Indian ecommerce market. DealShare’s unique approach combines discovery-led social sharing, group buying, and a gamified shopping experience with a simple consumer interface. They are well-positioned to power the next wave of Indian ecommerce growth,” Griffin Schroeder, Partner at Tiger Global.
Speaking on the investment, Tarun Davda, Managing Director, Matrix India, and one of the early investors in DealShare, says,
“After CarDekho, this is the second venture-funded company that is scaling well from Jaipur. It has been great to see how DealShare started in a smaller city, fine-tuned its model there for the first year, and has now taken the model to dozens of other cities.”
In two years, DealShare has serviced over three million consumers and over 20 million orders. It aims to hit a GMV run rate of $1 billion by end of 2021 and build a customer base of 10 million.
The startup has a presence in 40 cities across five states. It wants to venture into 100 cities in 10 states by the end of 2021.
Falcon Edge Capital had invested in DealShare in its seed round and have since seen the company grow rapidly while using minimal capital.
Navroz Udwadia, Co-founder and CEO, Falcon Edge Capital, said, "DealShare demonstrates best-in-class unit economics and capital efficiency (5.0x+) while delivering a compelling value proposition to its customers — value-conscious middle Indians in Tier II and III cities who crave regional products."
Creating more jobs and entrepreneurship
In a conversation with YourStory, Sourjyendu Medda, Co-founder, CBO, and CFO, DealShare, said,
"Marquee investors believing in us is clear proof that profitable and scalable models from any part of the country can attract investment. It is also proof that the future startups of India will be in the Bharat space and from Bharat. We aim to create businesses in Tier-II cities and even give mentorship to businesses who have the right models and financial flows in place.”
He adds that creating jobs and micro-entrepreneurship is a big agenda for DealShare. The startup will also use the funding to create more jobs in Tier II and III cities.
At present, DealShare has a team size of over 1,000, which it wants to triple by the end of FY21.
When the ecommerce wave took over India, close to a decade back with the likes of Flipkart and Amazon, only people from metros and top tier cities ordered online.
Eventually, with data becoming cheaper and mobile phones available in the country's most remote corners, DealShare co-founders — Vineet Rao, Sankar Bora, Sourjyendu Medda, and Rajat Shikhar — realised the second ecommerce wave would have a social commerce focus.
Thus, in 2018, they launched DealShare to build a social commerce model that primarily targeted non-metro and middle-income Indian consumers with mass-market products.
Building tech models
The founding team started with WhatsApp as the main channel for sales, which soon evolved into a standalone app. The first version of the app had a list of products and buy buttons, a simple form for the address, and was available in both Hindi and English.
The app was built in-house in two weeks and was a success amongst its customer base that was earlier buying on WhatsApp. Within 20 days of its launch, DealShare had over 30,000 customers, with zero marketing spend.
Chief Product Officer and Co-founder Rajat Shikhar said, “Building scalable technology amounts to solving some hard problems and technical challenges that are posed by the Bharat users."
He explained the key problems revolve around savviness, efficient logistics, and making shopping convenient, cost-effective, and fun with social engagement, personalisation, and gamification.
Speaking on the investment, Sandeep Singhal, Co-founder, WestBridge Capital, said, “We are very impressed with the traction that DealShare has been able to achieve, especially amongst first-time internet users, in the hinterlands of the country. We are confident they will be able to scale up further with the new round of funding.”
Replicating the model
Today, DealShare has built a new disruptive retail model for India, focusing on the affordability and price component for mass consumers. It offers high quality, low priced essentials coupled with a gamified, fun, and virality-driven vernacular shopping experience that makes it easy for first-time internet users to experience online shopping.
Co-founder and CEO Vineet Rao said India requires an indigenous model that differentiates itself from western and Chinese ecommerce models.
“The idea is to prove the model and prototype in one population size and replicate it across the length and breadth. We have always kept the fundamental principles same, but to ensure that the nuances and uniqueness of each region is retained, we employ a lot of the local population,” says Sourjyendu.
Building a community-led model
DealShare has a direct from factory procurement, gamified and viral demand generation, and is also building a community leader network called DealShare Dost that enables it to operate at the lowest cost operations in the world.
DealShare Dost is a network of community leaders who work on demand generation, servicing, and delivery of orders. There are two models: leaders who focus only on demand — accounting for over 5000 people, and leaders — close to 300 people — who do both demand and deliveries. These leaders also make a net earning of Rs 50,000.
“We have over 1000 micro-entrepreneurs partners promoting the community group buying (CGB) model in India, thereby generating a massive amount of employment opportunities across all tiers of cities and towns. We plan to strengthen our network further and increase it to 5000+ by 2021 end,” added Co-founder and Chief Operation Officer Sankar Bora.
The startup has now been able to touch an ARR GMV of close to $200 million.
Navroz said, “DealShare is constantly iterating and improving its playbook of viral customer acquisition through group buying and gamification while driving steady retention/cohort and unit economic improvements. DealShare’s best in class fulfilment capabilities allows it to deliver this value proposition at attractive unit economics."
He added, "Today, DealShare is a business that expects to break even in the next 12 months. They will also expand internationally, starting with the UAE, and is establishing its first base in Abu Dhabi.”
Edited by Suman Singh