Business-to-business (B2B) e-commerce startup Udan may look at novel ways to raise capital, including debt finding from global institutional investors, while keeping the option to go public in 18-24 months open.
“Public market investors want to come into private markets now,” Udaan co-founder Vaibhav Gupta stated during an interaction. Budget hotels startup Oyo too recently closed a $660-million debt financing round targeting to use the capital to reduce a part of its existing debt and bolster its tech capabilities.
Gupta said that some investors are looking to invest ahead of the firm’s listing as they believe that they may have to pay a lower premium. “The fundraising tools have become more sophisticated. When you can raise debt at a
cheaper rate, why dilute? You need to be watchful,” he stated.
Bengaluru-headquartered Udaan, which competes with vrick-and-mortar wholesale retailers such as Metro Cash and carry and reliance as well as online payers like Amazon and Walmart-owned Flipkart, seels goods to other businesses, including kirana stores. The average ticket price on the platform presently hovers around the Rs 8,000-mark. “We are looking to increase our sales to around one lakh tonnes every day in five years from the 5,000 tonnes that we are currently doing,” said Gupta.
Udaan presently has a gross merchandise value (GMV) of around $3 billion. While the firm plans to increase the number of users to 3-5 million during the period (in five years), the member of active users is between 0.5-1 million at present.
“We are looking to widen our portfolio too and beef up logistics,” said Sujeet Kumar, co-founder at Udaan. “While we are currently servicing 12,000 pin codes, which is roughly equivalent t 70-80% of the population, our aim is to expand our food business to 200 cities up from 100.”
Udaan, established five years ago by former Flipkart executives, has set itself a lofty goal- grabbing around 10% of India’s overall B2B trade in 10 years. E-commerce penetration in the B2B market is pegged at less than 1% of which Udaan claims to have 80% market share. When asked about the draft e-commerce rules that look to rein in online players engaging in anti-competitive activities, Kumar said the policy environment is favourable for B2B players as they provide a boost to small and medium businesses across the country.