Gurugram-based online grocery startup Grofers has raised a $200 Mn Series F funding round led by SoftBank Vision Fund. The company also raised capital from existing investors Tiger Global and Sequoia Capital as well as new investor KTB. The funding round has reportedly pushed Grofers close to the unicorn club, according to a Bloomberg report.
The fresh funds will help Grofers expand into new markets, build out its supply chain, warehousing infrastructure and private label product offerings, ensuring a steadily increasing range of products for customers.
Inc42 had earlier reported in March that SoftBank increased its stake in Grofers to 42% with $60 Mn investment in this round. Further, at the time, Sequoia and Tiger Global also invested $1.8 Mn and $19 Mn.
Founded in 2013 by IIT graduates Albinder Dhindsa and Saurabh Kumar, Grofers offers products across categories such as grocery, fruits and vegetables. It operates in 13 cities. Prior to this round, Grofers has raised $301.8 Mn in multiple rounds from investors such as Sequoia and Tiger Global.
Related Article: Grofers Widens Losses By 56% As It Expands Partner Stores Network
Grofers: 8X Growth In Two Years
Dhindsa has said that the company is already profitable in Delhi and getting there in Kolkata. “Grofers had a top line of $400 Mn and grew 8X in the last two years,” he was quoted as saying by Bloomberg.
Grofers closed FY 2018 with $129.49 Mn (INR 950 Cr) in sales. It is now chasing a revenue target of $34 Mn (INR 2,500 Cr) and plans to roll out more than 500 stock keeping units (SKUs) for FY 2019.
In January, Grofers claimed it recorded revenue of INR 310 Cr and crossed INR 300 Cr in monthly sales. It further claimed that 250K new customers on the platform in January.
Here’s what the company is doing so far:
- Grofers has stopped offering fresh products as it is concentrating its energy on private labels — Budget and Popular G-Brands
- It has expanded its private labels to offer 250 food and non-food products to its consumers
- It is targeting a stronger growth trajectory in 2019, with a 50% contribution from its private brands
- Grofers has changed its focus to establishing a foothold in Delhi-NCR by investing in its supply chain and technology
Why Is SoftBank Interested In Indian Grocery Market?
After a fall in funding in 2015-16, the consumer services market has been on a roll over the past few quarters. The larger companies such as Flipkart and Amazon are spending millions of dollars to share a piece of the pie. At the same time, investors such as SoftBank, Tencent, Temasek and Alibaba have kept the market warm with continued investments.
With mobile apps being used for shopping increasingly, fresh and reliable products delivered to the doorstep is a major attraction for users in urban areas.
To leverage this growing consumer trust and investor interest, here’s what the players have been doing:
- May 2019: BigBasket closed its $150 Mn Series F funding round and entered the unicorn club
- May 2019: Flipkart is in talks with Bengaluru-based grocery chain Namdhari Fresh
- April 2019: Gurugram-based hyperlocal delivery startup Milkbasket raised $2.86 Mn (INR 20 Cr) in a debt funding round
- September 2018: Amazon acquired majority stake in Aditya Birla’s retail chain More
- November 2018: Cab-hailing company Ola was reportedly looking to leverage its 125K food delivery riders from its food delivery unit, Foodpanda, for grocery fulfilment
A Goldman Sachs report has forecasted that the Indian online grocery market is set to reach $40 Mn (INR 270 Cr) by FY19, growing at a CAGR of 62% from 2016 to 2022. With this potential in the market and promising entrepreneurs, the investment in Grofers adds further momentum to the grocery sector.
Update: May 15, 2019| 6:25 PM
The story has been updated to clarify that the company has not joined the unicorn club. It has reached a valuation near $1 Bn. The error is regretted.