Funding Alert

Udaan raises $120 million from existing investors; aims IPO in 12-18 months


Udaan, a B2B e-commerce unicorn, recently raised $120 million in convertible notes and debt, led by existing shareholders and bondholders.

A convertible note is a pre-IPO instrument that is typically used by companies to convert into equity at the initial public offering.

Udaan, which was founded in 2016, enables supply chain and logistics operations centered on B2B trade. It has over three million retailers, chemists, kirana shops, HoReCa, farmers, and 25-30,000 sellers spread across 1,200+ cities and more than 12,000 pin codes in the country. 

Aside from the inventory issue, Udaan also assists merchants in obtaining working capital. Small businesses, particularly mom-and-pop shops, rely on the proceeds from the sale of their existing inventory to fund the purchase of their next batch. Because Udaan can see different merchants’ engagement on the platform, it can determine to whom it can safely grant working capital.

Udaan funding

The startup which has its headquarters in Bengaluru assists merchants to secure inventory and working capital. It has improved its unit economics by “~1,000bps with equally strong improvements in both gross margins and operating cost,” Aditya Pande, Udaan’s chief financial officer wrote. “The journey of right business design & unit economics has translated into a 60%+ reduction in the burn. Continued focus on customer-first thinking & initiatives on strengthening our value proposition for them have resulted in monthly buyer repeat rates increasing by 500+bps in the last 2 quarters,” he added.

He further said, “Despite the funding-related challenges being experienced by the larger start-up ecosystem, this fundraise reflects the confidence of investors in our business model and their endorsement of the journey to unit economics, driven by great progress in the evolution of our business model and cost efficiency, that we initiated last year.”

Udaan, which has Lightspeed India Partners and GGV Capital as investors, appointed Gupta as CEO last year. Udaan had no CEO prior to the relocation. During a funding round earlier this year, the startup was valued at $3.1 billion.

“Over the last few years, we have taken various steps towards building Udaan as a world-class institution that will last beyond our lifetime. We have made significant investments to build a tech-led solid and sustainable business, offer affordable & quality products, better services, and superb experience to our business partners. We have made significant progress in the past few years’ journey and it wouldn’t have been possible without the effort put in by each of us,” Pande wrote in an email.

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