DealShare a Jaipur based social commerce startup, owned and operated by Merabo Labs Pvt Ltd, has raised an additional $45 million from Abu Dhabi Investment Authority (ADIA) at a valuation of $1.7 billion, as an extension of its Series E round, the company said in a statement on Thursday.
The company is aiming to turn profitable over the next two years as it also plans for its initial public offering, the cofounder and chief executive officer Vineet Rao said, in an interaction on Thursday.
DealShare had raised $165 million in January as a part of its Series E funding round from Tiger Global Management, Alpha Wave Global, Dragoneer Investments Group, Kora Capital, and Unilever Ventures at an estimated valuation of $1.63 billion. The company had become the fourth unicorn of 2022 with the fundraise, VCCircle had reported.
With the latest fundraise, DealShare has raised $393 million to date. Of this, the company has spent only about $70 million till date, Rao said.
Around $40-45 million of the total $210 million Series E funding round was a secondary share sale, with some early-stage investors exiting, he added, without naming the exiting investors.
DealShare plans to use the funds to enhance its technology, customer acquisition and for product innovation, the company said. It is expanding its social commerce platform and aims to cater to 500 million new-to-internet users.
“The majority of the funds will be deployed in expanding logistics network as well as investments into technology and creating our own brands. We have created a dedicated team to work on creating our private brands. These brands will be owned by the company and will get products directly from factories to the consumers under our own brand,” Rao told VCCircle.
Rao said that the company grew more than 13X over the last year and claimed that it currently has an annualized gross revenue runrate of $700 million. The company expects the annulized gross revenue runrate to hit $1 billion in March, he said.
Founded in 2018 by Rao, Sourjyendu Medda, Sankar Bora and Rajat Shikhar,DealShare offers groceries, essentials and home care products. The company targets middle- and lower-income groups through a community group buying model. The platform enables users in tier 2 and lower cities to purchase products at competitive prices through a network of micro-entrepreneurs in their community in local languages.
Rao claimed that DealShare cut down its losses as a percentage of revenue by over 5% in 2020-21 (FY21), and said that the company is ‘very close’ to operational profitability. DealShare expects to be operationally profitable by the end of the current financial year, Rao said. At bottom line level, Rao said he expects DealShare to turn profitable in 2023-24 (FY24).
Rao also said that the company is looking for an initial public offering (IPO) in the next 18-24 months.
“I think we will also be doing an IPO sooner than we would have, as plans to go for it have accelerated over the last year. Having said that, the discussion is at a very early stage, but we will be looking for an IPO – if the market conditions do not change in the next 18 to 24 months from now – once we are profitable,” said Rao.
Meanwhile, DealShare is working on creating an offline franchise network for customers that have not been able to adapt to the digital transition, Rao said.
“We have already started partnering with kirana shops (local neighborhood stores) under the franchise, where either online or offline, people get the same high-quality products at low prices,” said Rao.
The company currently manages about 25 lakh square feet of warehousing currently against 2 lakh a year ago, and the current investment will help DealShare to expand its footprint further. DealShare currently has a presence in over 130 cities today across 10 states, and Rao said that the company aims to start operations in over 300 cities by the end of this year. Rao said that the company is bullish on geographies such as Delhi NCR, Gujarat, West Bengal and is witnessing strong traction from a lot of southern states also.
Avendus Capital acted as the exclusive financial advisor to DealShare in the latest transaction.
