Udaan Funding: Udaan Closes $ 200 Million Debt Financing Through Convertible Notes

Bangalore: Business-to-business (B2B) e-commerce startup Udaan closed a $ 200 million debt financing round by issuing convertible notes to primarily five new investors, according to an internal company memo from CFO Aditya Pande.

ET reviewed the content of the memo shared by Pande with employees on Wednesday.

The names of the investors were not disclosed in the memo. People familiar with the matter said Tor Investment, Arena Investors and M&G Investments were among the new investors.

For Udaan, which has announced its intention to go public in the next 18-24 months, the decision to resort to debt financing through convertible notes appears important. These investors will have the option of converting their notes into shares, potentially before the IPO.

“We are thrilled and happy to share that we have five new top investors aboard the Udaan juggernaut, as part of our recently completed convertible note financing. This round was twice oversubscribed and also saw participation from our existing investors, including those who bought the company through the secondary round (Esop) in the first half of 2021, ”Pande said in his note.

According to him, the latest funding reflects Udaan’s “capitalization expansion strategy” as she begins her IPO journey. “With this convertible offering, we, as a company, have started to build a whole new muscle in our finance function – which we will continue to strengthen as we move forward,” added Pande. He was previously the CFO of Indigo, the airline.

A spokesperson for Udaan declined to comment on its latest financing through convertible notes. Emails sent to investors named by those in the know went unanswered until press time on Wednesday.

Pande said in his memo that companies like Airbnb, Uber and Spotify had raised similar debt financing through convertible notes before their IPOs.

The Bengaluru-based company has also raised $ 50 million in traditional debt financing.

Udaan underwent a major change in its management last year. In September, one of its co-founders, Vaibhav Gupta, was appointed CEO of the company. At the time, Udaan said in an official statement that Sujeet Kumar and Amod Malviya, the other two co-founders, would support the functioning of a CEO-led organization and continue to shape the strategic roadmap and investment decisions. as active members of the board of directors.

According to sources, the Bengaluru-based company explored a fundraiser last year and appointed investment banker Goldman Sachs. But the company was unable to mop up equity funding at the time, sources told ET.

In January 2021, it raised $ 280 million as a continuation of its previous funding round of $ 585 million, after which it was valued at $ 3.1 billion. In total, he has now raised over $ 1 billion from investors such as DST Global, GGV Capital, Lightspeed Venture Partners, Altimeter Capital and Tencent.

Founded by former Flipkart executives Kumar, Gupta and Malviya, Udaan increasingly seeks to sell directly to customers through services like Pickily and Price Company, although its core business remains B2B commerce. In its core B2B business, it counts Reliance’s wholesale business among its competitors.

The company had recovered the figures from before the second wave of Covid in July of last year. Aided by the pandemic, food continues to be its fastest growing segment, while pharmaceuticals are currently another area of ​​focus. In addition to these segments, Udaan’s B2B business operates in segments such as fashion, electronics and appliances, home and kitchen, footwear and electrical.

ET first reported in November that the company was entering the consumer-focused grocery business through the group or community buying model with a new platform called Price Company, similar to Chinese company Pinduoduo.

While Pickily is an online supermarket app for Level I customers, Price Company is a group buying platform to serve customers beyond major cities. ET had reported that Udaan aimed to leverage its existing supply chain network in these markets to rapidly expand the new business in 2022. Pickily has a presence in parts of Bengaluru and Hyderabad.

Udaan has around 3 million users, 2 million retailers and 30,000 B2B commerce sellers. It is currently present in around 1,000 towns and villages through 12,000 PIN codes. Given his optimism about Price Company, he aims to bring Price Company to 1,500 cities by December of this year, ET reported in November.