B2B Ecommerce Unicorn Udaan Bags $120 Mn In Debt, Delays IPO Plan

Bengaluru-based B2B ecommerce startup Udaan has raised $120 Mn in convertible notes and debt from its existing investors – shareholders and bondholders. With this round, the startup has raised more than $350 Mn in debt in the past four quarters. 

According to an internal note seen by Inc42, Udaan’s chief financial officer Aditya Pande wrote that the startup is getting ready for an IPO in the next 12-18 months. The startup in January 2022 too, had stated a timeline of 12-18 months, indicating a further delay in listing plans.

The round comes at a time when equity funding has reached 2020 levels, making it harder for late stage startups to raise funds due to their profitability issues. 

Udaan has acknowledged the paucity of funds, and there are funding-related challenges being experienced by the larger startup ecosystem as well.

“This fundraise [for Udaan] reflects the confidence of investors in our business model and their endorsement of the journey to unit economics,” Pande said in the mail.

Udaan is bullish on its unit economics, business model, cost efficiency and sustainability of the business. It claimed that its unit economics improved by approximately 1000bps and reduced cash burn by more than 60%. 

The number of repeat buyers shopping on the platform has also risen by 500 bps in the last two quarters, said the startup.

Decoding Udaan’s $350 Mn+ Total Debt Fundraise In One Year

Six-year-old Udaan, launched by former Flipkart employees Sujeet Kumar, Vaibhav Gupta and Amod Malviya, connects SMBs, manufacturers, wholesalers, traders and retailers to sell goods and other services.

It claims to have a network of 3 Mn retailers and 30K+ sellers across the country, selling products from more than 5 Lakh product categories in 1,000+ Indian cities.

As funding winter bites the late stage startup ecosystem’s valuation as well as share dilution, startups are increasingly raising venture debt funds. 

Between October 2021 and April 2022, Udaan raised two tranches of debt funds.

In January 2022, it raised $250 Mn via convertible notes and debt from investors M&G Prudential, Kaiser Permanente, Nomura, TOR, Arena Investors, Samena Capital, Ishana Capital and Microsoft, among others.

Further, in November 2021, it raised nearly $15.17 Mn in debt from Innoven Capital.

Udaan claims to be using the funds to grow its team (after laying off nearly 180 employees in June 2022), to build tech capabilities with sustainability in mind and make ‘consumer-centric services’.

The startup competes with the likes of Moglix, IndiaMART, Ofbusiness and others for a bite of $100 Bn worth of B2B ecommerce ecosystem. 

For that, it has raised $1.17 Bn in equity and $350 Mn+ in debt from Lightspeed Ventures, GGV Capital and others and is valued at over $3 Bn.