Udaan, the e-commerce startup, is set to reduce expenses in preparation for its 2025 initial public offering

• ByStartupStory     |    November 6, 2023

Indian e-commerce startup Udaan is gearing up for its planned IPO in 2025 by focusing on cost reduction and establishing partnerships with consumer brands. CEO Vaibhav Gupta is determined to achieve operating profitability within the next 18 months, coinciding with the company’s public offering.

Competing with giants like Reliance Industries Ltd. and Walmart Inc.’s Flipkart, Udaan aims to be the go-to platform for smaller merchants seeking goods. According to Gupta, the company’s main priorities are “steady and predictable financial performance” and ensuring they maintain a significant presence in the market.

Udaan, backed by Lightspeed Venture Partners, is part of the wave of Indian startups looking to harness the nation’s growing economy while meeting the expectations of profitability from investors. Last year, the company, like many other Indian startups, streamlined its operations by reducing its workforce and tightening internal controls and compliance. Currently, Udaan employs around 1,800 staff.

Gupta emphasized the importance of moving towards a more professionalized management structure, a professionalized board, and institutionalized shareholders as the company prepares for its transition to the public markets.

As for its IPO listing, Udaan has yet to decide whether it will go public in India or overseas. In 2021, the company was valued at over $3 billion, and there were talks of raising $400 million in funding. Lightspeed Venture Partners holds about 35% of Udaan, while Tencent Holdings Ltd. has a 6% stake in the company.

Founded in 2016 by three engineers who previously worked at Flipkart, Udaan’s online marketplace and logistics networks help small retailers receive quicker deliveries and eliminate traditional middlemen. While this digital-led wholesale business currently represents a small portion of India’s retail market, it has the potential to grow to $150 billion in sales and provide a 100% return on capital invested in a decade, according to estimates from McKinsey & Co.

Additionally, Udaan has ventured into financing through its fintech unit, providing working capital loans to shopkeepers for inventory purchases. This business is already profitable before taxes and is experiencing annual growth of 70%, according to Gupta.

Udaan’s multifaceted approach, combining e-commerce, logistics, and fintech, aims to transform and streamline trade in India. As the company continues to navigate its path to the public markets, it remains a key player in India’s startup landscape.

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