Business-to-business marketplace Udaan has raised $120 million (around Rs 960 crore) in convertible notes and debt, led by existing shareholders and bondholders, the company's chief financial officer told employees in an internal mail reviewed by VCCircle. With this, the company aims for a public market listing over the next 12-18 months, the mail said.
With this round, the total funds raised by Udaan through convertible notes and debt in the last four quarters have crossed $350 million, making it one of the largest structured instrument fundraises in the country.
“Despite the funding related challenges being experienced by the larger start-up ecosystem, this fund raise reflects the confidence of investors in our business model and their endorsement of the journey to unit economics, driven by great progress in evolution of our business model and cost efficiency, that we initiated last year,” read the mail from Aditya Pande, chief financial officer at Udaan.
“These steps have not only helped us achieve positive unit economics last quarter, but also improved efficiency in the system, with huge cost benefits, which is key to building a sustainable business,” he added.
The company is aiming to go public over the next 12-18 months, as per the mail.
In January this year, the company had raised $250 million, which comprised $200 million worth of convertible notes or short-term debt that can subsequently be converted to equity and $50 million of debt.
Microsoft Corporation had joined the company's fundraise in April this year. The $225 million round was stitched together from investors such as M&G Prudential, Kaiser Permanente, Nomura, TOR, Arena Investors, Samena Capital and Ishana Capital.
Founded in 2016 by former Flipkart employees Amod Malviya, Sujeet Kumar, and Vaibhav Gupta, Udaan offers a platform for traders, wholesalers, retailers, and manufacturers to come together, allowing them to find clients, suppliers, and products across categories and interact with one another directly for the lowest price.
The company counts investors such as Octahedron Capital, Moonstone Capital, Lightspeed Venture Partners, DST Global, GGV Capital, Altimeter Capital and Tencent among others on its captable. It raised $280 million in an equity funding round in January 2021 and has so far raised more than $1.5 billion in equity and debt.
The company spokesperson declined to comment on the new debt raise.
As per the mail from Pande to the employees, the company’s unit economics improved by around 1000 basis points with equally strong improvements in gross margins and operating cost.
“The journey of right business design and unit economics has translated into more than 60% reduction in burn,” it said.
The company’s monthly buyer repeat rates increased by more than 500 bps in the last 2 quarters, it said.
With the overall funding environment getting grim, many companies such as Udaan, Cars24, Pharmeasy among others have either raised or are in the market to raise debt from global investors. This debt is convertible into equity and is considered senior debt where it is rated above other debt holders or lenders, experts say. This capital helps these companies tide over the funding winter and wait it out till the overall investment environment improves.
