BigBasket Raises INR 100 Cr Venture Debt From Trifecta Capital

Trifecta Capital said it has provided INR 100 Cr of venture debt funding to online food and grocery delivery platform BigBasket in what it called “the largest venture debt transaction in the country”.

In a press statement the firm said that Big Basket said the funding would be used to meet the working capital and capex requirements of the company including setting up new warehouses, strengthening the cold chain, setting up facilities for reprocessing of fruits and vegetables and for scaling-up of its supply chain for the recently-launched BB Daily milk subscription business and the BB Instant vending machine business.

Why BigBasket Chose Venture Debt Funding

Vipul Parekh, CFO and cofounder of BigBasket’s parent entity SuperMarket Grocery Supplies Pvt. Ltd said the company finds venture debt funding the optimal form of financing for working capital needs and for capex. BigBasket had taken venture debt from Trifecta Capital in 2017 as well.

According to Parekh, venture debt not only reduces share dilution, but it also reduces the cost of capital, improves returns on equity and expands the runway for the company. “We recently raised $ 150 million from marquee investors and decided to supplement the equity capital with additional venture debt,” he added.

Focus On Subscription?

Just a few days ago, it was reported that BigBasket maybe shutting down its on-demand grocery services which provides the user certain grocery products in under 90 minutes. 

The release today does not make any comments or direct reference to the express business but it does go into detail about how the new funds will be used to feed into initiatives like strengthening supply chain of its milk subscription business and focussing on the freshness of the produce which is where a lot of battles between the top egrocers may boil down to when talking about differentiation as cost per delivery of the on demand services  have proven to not be viable. 

“A significant part of our business is fresh fruits and vegetables, the bulk of which is sourced directly from farms. It is crucial that we maintain the quality right up to the last mile. Funding such capex requirements is best done through debt, ”said Hari Menon, Co-Founder, SuperMarket Grocery Supplies Pvt. Ltd. 

BigBasket Supplements Funding Round

In May 2019, BigBasket closed a $150 Mn Series F funding round. With the round, the company has comfortably crossed into unicorn territory, the first and only online grocer to achieve the distinction in India. It issued shares at $114.28571 per share to Chinese ecommerce giant Alibaba, South Korea’s Mirae Asset Global Investments and the UK government-backed CDC Group.

According to the Ministry of Corporate Affairs filings accessed by Inc42, here’s the breakdown of the BigBasket funding round in May 2019:

With this round, the total funding raised by BigBasket has reached $1.02 Bn across 14 funding rounds from investors such as Alibaba, Helion Venture Partners, Bessemer Venture Partners, Abraaj Group, LionRock Capital and others.