Udaan, the B2B ecommerce giant, which has been grappling with fundraising difficulties for some time now, might finally see a ray of hope.
A Bengaluru-based unicorn is currently engaged in discussions with M&G Prudential, a UK-based savings and investment company, about potentially spearheading an equity funding round, as reported by ET.
The upcoming funding round, expected to range from $100 million to $150 million, is likely to result in a reduction of Udaan’s valuation to under $2 billion, down from its previous peak valuation of $3.2 billion. If the round does indeed conclude with a $2 billion valuation, it would represent a 37% decrease in valuation.
Currently, M&G is in the process of conducting due diligence, and there is a likelihood of new investors joining the startup’s shareholder table in the upcoming days.
Last year, M&G had extended its support to Udaan through the issuance of convertible notes.
In January of last year, Udaan successfully obtained $200 million in debt financing through the issuance of convertible notes to five new investors, including Tor Investment, Arena Investors, and M&G Investments.
The report further mentioned that all of these investors, including M&G Investments, are poised to convert the debt into equity as part of the current ongoing funding round.
The potential funding round coincides with the startup’s significant overhaul of its top leadership and operational structure. In September of this year, the company merged its Essentials business, encompassing FMCG, staples, and pharma categories, with the Discretionary business, which encompasses general merchandise, lifestyle, and electronics categories.
In the process of combining these two divisions, Vivek Gupta, who previously headed the Essentials business, stepped down from his position while retaining an advisory role with Udaan’s board.
During the fiscal year 2023, the B2B ecommerce unicorn witnessed a 43% reduction in its operating revenue, which decreased from INR 9,897.3 Cr in the preceding year to INR 5,609 Cr.
In FY23, the startup implemented a workforce reduction strategy, letting go of approximately 350 employees in a bid to reduce costs. Nonetheless, certain media reports speculate that the total number of layoffs could have reached as high as 1,000.
Established in 2016 by Gupta, Sujeet Kumar, and Amod Malviya, Udaan specializes in facilitating supply chain and logistics operations geared toward B2B commerce. The platform boasts the capability to facilitate daily deliveries spanning more than 1,000 cities and encompassing 12,500 pin codes via udaanExpress.
Up to this point, Udaan has secured $1.8 billion in funding and boasts prominent supporters, including Lightspeed, Microsoft, Tencent, and others. It engages in direct competition with companies like Dealshare.