MUMBAI: B2B e-commerce startup Udaan has raised $75 million in its Series G funding round, led by existing investor M&G Plc, at a static valuation of $1.8 billion. This news came from Udaan's co-founder and CEO Vaibhav Gupta during a recent town hall meeting with employees. The company is also reportedly engaging in advanced discussions to raise an additional $25 million, which is anticipated to be finalized by the next quarter.
The fresh capital will be strategically deployed to bolster Udaan's supply chain capabilities, strengthen vendor partnerships, and prepare the company for its aims to go public. The move is timely, considering the rapid growth of the B2B e-commerce sector, which could surpass sales of $125 billion by 2027, as per forecasts from Avendus Capital.
Udaan is positioning itself as one of the major players in this rapidly growing market, competing with giants like Amazon, Flipkart, and Reliance’s JioMart. The company has so far raised approximately $1.9 billion across various funding rounds, with this latest infusion closely following its earlier $340 million round observed in December 2023.
Despite the funding challenges typically faced by many startups, Udaan has shown resilience. The company’s revenue reached approximately ₹5,707 crore for the fiscal year 2023-24, reflecting slight improvement compared to previous periods. Further, Udaan has been proactive with its cost-management strategies, trimming Ebitda burn by 36% year-on-year to around ₹923 crore, and cutting noted expenses significantly.
Gupta expressed optimism about the company's direction during the town hall, stating, "The company plans to utilize the funds to strengthen strategic vendor partnerships, deepen market penetration, and bolster long-term capabilities." The overarching plan to strengthen these foundations is mirrored by Udaan’s intent to prepare for its IPO, targeting late 2025 or early 2026 for public listing.
This funding round maintains Udaan's valuation at roughly $1.8 billion—an impressive feat considering its peak valuation was $3.2 billion back in 2021. This stability reflects the company’s commitment to remain competitive and attractive to investors, even as it navigates the challenges present in the e-commerce industry.
Udaan has made substantial operational changes as well. Recently, it received approval from the National Company Law Tribunal (NCLT) for the restructuring of its various business entities under the name Hiveloop Ecommerce Pvt Ltd. This consolidation aims to streamline operations and improve efficiency, facilitating potential future financing options, including its planned IPO.
The restructuring will allow Udaan to unite its operations and focus on enhancing customer experiences, deepening marketplace penetration, and strengthening its network of vendor relationships. These efforts will not only fortify its position against competitors but will also enable the firm to leverage its size and resources more effectively.
Udaan’s strategic choices have led to significant progress. The company has seen remarkable 65% revenue growth and improvement of buyer wallet share, increasing engagement with retailers across various categories like FMCG products, electronics, and medicines.
Other observations from their financial performance indicate improved gross margins, rising contribution margins, and nearly 90% repeat customer ratio. Both the operational results and growth metrics highlight Udaan’s potential and are paving the way for its ambitious, future prospects.
With the combination of fresh capital and strategic restructuring, Udaan is not only gearing up for upcoming challenges but also positioning itself for sustainable long-term growth. The company’s leadership remains confident about achieving profitability and maintaining upward trajectories, setting the stage for what could become one of the significant IPOs in the Indian market.