Mumbai-based hyperlocal delivery startup Grab has raised $1.5 Mn (INR 9 Cr) funding from SIDBI Venture Capital Arm, SIDBI Venture Capital Limited (SVCL).
Commenting on the investment utilisation plans, Pratish Sanghvi (Grab Co-Founder) stated, “We have created significant traction past year and are reporting double-digit gross margins, this fund raise is adequate for utilisation towards scaling up our smart locker platform and crowdsourced distribution centre model.”
A representative from SIDBI Ventures further added, “At SIDBI, we were eyeing the technology led logistics startups for a while. What really stood out at Grab is their sector agnostic approach and the best in the industry unit economics coupled with operations at scale. Grab is perhaps the first company which is making money and is few months away from being EBITDA positive.”
Grab was the earliest movers into the hyperlocal delivery space that saw a number of entrants in 2015 followed by a massive correct the on with the majority of the players such as RoadRunnr, Pickingo, Opinio, PepperTap, Parcelled etc., pivoting or closing down due to excessive cash burn and negative unit economics.
Grab (earlier Grab a Grab) was founded in 2012 by Jignesh Patel, Nishant Vora, and Pratish Sanghvi as the last mile food delivery startup. Later on, the startup spread its hyperlocal delivery services to enterprises such as restaurants, foodtech platforms, groceries, ecommerce platforms, and banks. It now provides services ranging from on-demand, reverse deliveries, first mile, and last mile logistics.
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Grab claims to have worked with 3,305 merchants across 23+ cities with a client base including brands such as Zomato, McDonald’s, Big Bazaar, RBL Bank, Pantaloons, Faasos, Pizza Hut, among others. The startup has earlier raised two funding rounds in 2015 and 2016 respectively and counts Aramex, Zomato, Sixth Sense Ventures as its investors.
Hyperlocal delivery space in India has seen steady growth with players like ShadowFax, Genie, Grofers, Zopnow, and ecommerce marketplaces. In May 2017, Genie resumed its operations after raising $250K in an angel funding round from High Net Worth Individuals based out of Dubai, Singapore and India. Earlier in August 2016, Shadowfax raised $10 Mn (INR 67 Cr) as part of its Series B funding from Eight Roads Ventures.
According to RedSeer Consulting, Indian foodtech industry suggested the possibility of a price war to kick in with the entry of Uber and Ola in the market. And this, in turn, is expected to increase daily order volume. The expansion of the foodtech industry is further fueled by online food delivery startups.
Further, the Indian hyperlocal delivery space is also getting crowded fast on account of busier lifestyles of the millennials and increasing smartphone penetration. Despite a low in 2015-2016, the market has seen a gradual rise in the segment with global players betting their investments in the sector.
A report on Statista suggested that Indian food delivery segment is expected to record $3 Bn revenues in 2018. It expects the revenue to show an annual growth rate (CAGR 2018-2022) of 16.7% resulting in a market volume of $5.7 Bn in 2022.
India’s food delivery and take away market has been pegged at $19 Bn by Morgan Stanley. The rise in projections has been credited to the entry of major players like UberEats, Google Areo, Ola (with the acquisition of FoodPanda India), as well as the ongoing growth of multi-dimensional players like Zomato.
Grab isn’t the first startup to have benefitted from $1.5 Bn Fund of Funds for Startups (FFS) announced by Prime Minister Narendra Modi. According to October 2017 status report by DIPP on the Startup India website, about $92 Mn (INR 605.7 Cr) from the fund has already been released to SIDBI, and 75 startups have received funding from 17 AIFs so far. With $1.3 Mn funds from SIDBI’s venture capital arm, the growth and services of the hyperlocal delivery startup Grab will be something to keep an eye on.
Update 1, February 22, 2018
Based on a paper.vc report, earlier it was reported that Grab has raised $1.3 Mn from Maharashtra State Social Venture Fund. The story has now been updated with the response from Grab’s founder Pratish Sanghvi.