Udaan Likely To Raise A Downround, Valuation May Dip Below $2 Bn

SUMMARY

Udaan is in talks with UK-based savings and investment firm M&G Prudential for an equity round

The fresh round, $100 Mn - $150 Mn in size, will likely mark down Udaan’s valuation to under $2 Bn from its peak $3.2 Bn valuation

In FY23, the startup saw its operating revenue shrink by 43% to INR 5,609 Cr from INR 9,897.3 Cr in FY22

B2B ecommerce giant Udaan, which has been struggling to raise fund for some time now, might get some respite.

Bengaluru-based unicorn is in talks with UK-based savings and investment firm M&G Prudential to lead an equity round, ET said in a report.

The fresh round, likely to be around $100 Mn – $150 Mn in size, will probably mark down Udaan’s valuation to under $2 Bn from its peak $3.2 Bn valuation. If the round materialises at a $2 Bn valuation, this will be a 37% valuation markdown.

At present, M&G is conducting due diligence and new investors are also likely to join the startup’s captable in the coming days.

Last year, M&G had invested in Udaan via convertible notes.

In January of last year, Udaan had raised a $200 Mn debt financing round by issuing convertible notes to five new investors including Tor Investment, Arena Investors, M&G Investments.

All these investors including M&G Investments will be converting the debt into equity in this ongoing funding round, the report added.

The possible funding round comes at a time when the startup has been conducting a major restructuring of its top brass and its operations. In September of this year, the startup merged the Essentials business, comprising FMCG, staples, and pharma categories, with the Discretionary business, which includes general merchandise, lifestyle, and electronics categories.

As part of this merger of the two divisions, Vivek Gupta, who led the Essentials business, transitioned out from his role but continued to be an advisor to Udaan’s board.

In FY23, the B2B ecommerce unicorn saw its operating revenue shrunk by 43% to INR 5,609 Cr from INR 9,897.3 Cr in the year prior.

In FY23, the startup laid off around 350 employees to cut costs. However, some media reports suggest that the layoff count could have been as high as 1,000.

Founded in 2016 by Gupta, Sujeet Kumar, and Amod Malviya, Udaan enables supply chain and logistics operations focused on B2B trade. It claims to enable daily delivery across over 1,000 cities and 12,500 pin codes through udaanExpress.

Udaan, to date, has raised $1.8 Bn in funding and counts marquee backers such as Lightspeed, Microsoft, Tencent, among others. It directly competes against the likes of Dealshare.