Online Grocery Startup Grofers In Talks To Raise $65 Mn Funding At 40% Lower Valuation

Online Grocery Startup Grofers In Talks To Raise $65 Mn Funding At 40% Lower Valuation

SUMMARY

As Per Sources, Softbank Group Will Be Leading This Round Of Funding In Grofers

Gurugram-based online grocery delivery startup Grofers is said to be in talks to raise $60-65 Mn in funding from its existing group of investors at a nearly 40% drop in its valuation.

A report in LiveMint quoted two people close to the development as saying that this round of funding will be led by Japan’s Softbank Group with Tiger Global Management’s support. Grofers early investor Sequoia Capital is not expected to participate in the round.

In response to Inc42’s queries, a spokesperson for Grofers said, “The details on the funding are speculative and we’re evaluating the same.”

This comes at the time when the company has reportedly shut its operations in several cities and changed its business model. Grofers is now focused on establishing its foothold in Delhi/NCR by investing in its supply chain and technology.

In the past year, Grofers was also said to be in sale talks with rival BigBasket and Paytm. The talks, however, hadn’t materialised.

Incidentally, Bengaluru-headquartered BigBasket recently secured $300 Mn Series E funding in a round led by Alibaba, with the participation of Abraaj Capital, Sands Capital and IFC.

A Brief Overview Of Grofers: From 2013 To Present

Founded in 2013 by Albinder Dhindsa and Saurabh Kumar, Grofers offers deliveries in 26 cities at present. It offers products like grocery, fruits and vegetables, beauty and wellness, household care, baby care, pet care, bakery and meats and seafood.

It delivers nearly 15,000 orders daily with an average basket size of $18.5 – $20.8 (INR 1,200- INR 1,350).

Till date, the company has raised close to $180.2 Mn funding across multiple rounds from investors like Tiger Global Management, Sequoia Capital, SoftBank Group and Cyriac Roeding.

In November 2015, the company raised  $120 Mn at a valuation of about $400 Mn. Later in September 2017, the online grocery startup secured $839 K(INR 5.5 Cr) from its existing investor, Trifecta Capital in debt funding.

A fortnight later, it raised another $14.7 Mn from its parent company, Grofers International.

As of March 2017, BigBasket held about 35% market share in the online grocery segment, closely followed by Grofers at 31.5% and Amazon at 31.2%, a report by Kalagato said.

In February 2017, the company signed a pan-India partnership with Reliance Fresh. In April last year, the company was reportedly setting up 15 offline stores across Delhi/NCR.

The plan was to open two types of offline stores: tuck shops and franchise stores. Grofers was also in talks with startups like OYO to open tuck shops in its premises.

In July 2017, DIPP approved its entry into food retail. At the time, it was reported that the company was looking to bring an additional capital of $40 Mn to expand its business and grow the market.

What’s Been Happening In The Indian Online Grocery Segment

A report by RedSeer Consulting said that the online grocery market stood at $1 Bn in 2017. As per a Goldman Sachs report, “The domestic online retail industry is evolving into a hyperlocal, on-demand market. India’s ecommerce market is estimated to grow 15 times to $300 Bn by 2030.

Morgan Stanley expects the online food and grocery segment to become the fastest-growing segment, expanding at a compounded annual growth rate of 141% by 2020 and contributing $15 Bn, or 12.5%, of overall online retail sales.

Major players in ecommerce market have also forayed into space. Other startups in the online grocery sector include BigBasket, Satvacart, Godrej Nature’s Basket and DailyNinja, among others.

Recently, post BigBasket’s massive fundraise from Alibaba, Abraaj Capital, Sands Capital and IFC, reports surfaced that Paytm Mall was looking to integrate the e-grocer on its platform, as a way of exploring the online grocery market.

Global ecommerce player Amazon recently became the first foreign company to set a food retails business in India. It will now sell locally made and packaged food to the consumers directly, and will compete with other leading online grocery and food retail marketplaces like Grofers and BigBasket.

In July 2017, the Indian government gave the final go-ahead to Amazon to invest $500 Mn in India’s food retail space.

Flipkart, on the other hand, is reportedly looking to set up a chain of retail stores across the country, in partnership with global retail giant Walmart who is, in turn, planning to acquire more than 40% stake in the homegrown ecommerce unicorn.

If the deal materialises, Flipkart will be able to procure grocery and consumer goods directly from Walmart’s wholesale stores, which would, in turn, ensure better delivery speed and product availability.

 Last November, the online marketplace made a soft launch of its online groceries category under Supermart in Bengaluru. As per reports, Flipkart is building a dedicated supply chain for its grocery category under Supermart. This is Flipkart’s second attempt into the online grocery segment, after the shutdown of ‘Nearby’ in 2016.

If the funding goes through, Grofers is expected to survive for a better time and expand its grocery services and business model.

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
Unlock 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
Unlock 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

Online Grocery Startup Grofers In Talks To Raise $65 Mn Funding At 40% Lower Valuation-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

Online Grocery Startup Grofers In Talks To Raise $65 Mn Funding At 40% Lower Valuation-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

Online Grocery Startup Grofers In Talks To Raise $65 Mn Funding At 40% Lower Valuation-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

Online Grocery Startup Grofers In Talks To Raise $65 Mn Funding At 40% Lower Valuation-Inc42 Media
Online Grocery Startup Grofers In Talks To Raise $65 Mn Funding At 40% Lower Valuation-Inc42 Media
You’re in Good company