The investment branch of the UK retail bank M&G has spearheaded a funding round of $340 million into Udaan, a business-to-business e-commerce startup based in Bengaluru. This marks one of the most substantial financing rounds secured by an Indian startup in 2023.
Udaan, a seven-year-old startup, facilitates smaller merchants in Indian cities and towns to secure inventories from major brands and access working capital. The newly acquired funds, which include convertible debt, also saw participation from existing backers Lightspeed Venture Partners and DST Global. The funding round is pending regulatory approval and positions Udaan to compete with major players like Reliance Retail, led by Mukesh Ambani.
This Series E funding, the first equity round for Udaan since 2021, ensures the startup’s full funding and charts a course towards profitability in the next 12-18 months. Udaan aims to file for an initial public offering in 2025 and has been consulting with bankers to gauge readiness.
Although the valuation in the recent round wasn’t disclosed, Udaan was valued at $3.1 billion (post-money) in 2021. Despite being a down round, the funding is crucial for the startup, which has spent the past two years optimizing costs and efficiency. The startup also needed funds to repay a loan due in early 2024, requiring an equivalent amount raised against equity for the entire loan tenure.
Udaan, founded by former Flipkart executives, connects thousands of sellers to 3 million retailers, offering a wide range of products across categories. The startup’s mission is to empower small businesses in India, particularly the millions of kirana stores, by streamlining operations and providing access to reliable products. The regional-operated design of Udaan aims to enhance customer proximity and operational efficiency.
M&G Catalyst’s Director for EMEA, Niranjan Sirdeshpande, expressed support for Udaan’s growth strategy, emphasizing its potential to be a trusted partner for small businesses in India through technology, financial inclusivity, and supply chain capabilities.
Udaan has raised over $1.5 billion through a combination of equity and debt over the years and is considered one of Lightspeed’s significant investments in India and other global markets. Lightspeed, which owned over a third of Udaan before the Series E funding, sees this financing as a milestone that positions Udaan to strengthen its leadership as India’s largest EB2B marketplace.
