Udaan Bags $340 Million in Series E Funding Led by M&G Plc.

Bangalore-based B2B e-commerce giant Udaan has successfully raised $340 million in a Series E funding round led by London-based investment firm M&G Plc, with participation from Lightspeed Venture Partners and DST Global.

The funding, a mix of equity and convertible notes, marks a crucial milestone for the Bengaluru-based company as it navigates its path toward profitability and a potential public market debut within the next 12-18 months.

“Series E round strengthens our balance sheet and fully funds our business plan. It enables our continued journey of growth and profitability, positioning us well to be public-market-ready in the next 12-18 months. The regional-operated design will get us closer to our customers and make our operations more agile and efficient,” said Vaibhav Gupta, co-founder and CEO of Udaan.

In the fiscal year 2023, Udaan demonstrated resilience as its losses narrowed by 33.7 percent, totaling INR 2,076 crore compared to INR 3,132 crore in FY22.

However, gross revenue saw a 43.1 percent decline, decreasing from INR 9,900 crore to INR 5,629 crore during the same period. Despite the challenging environment for late-stage start-ups seeking capital, Udaan’s fundraising success stands out, echoing the notable exceptions of PhonePe and Lenskart.

Strategic Utilization of Funds

Udaan outlined its plan to utilize the freshly acquired capital to fortify various aspects of its business. The focus includes enhancing customer experience, expanding market penetration, fostering strategic vendor partnerships, and reinforcing long-term supply chain and credit capabilities.

Founded in 2016 by former Flipkart executives Sujeet Kumar, Amod Malviya, and Vaibhav Gupta, Udaan has raised over $1.8 billion from key investors, including Tencent and DST Global. Despite Kumar and Malviya stepping down from active roles in 2022, they maintain equity in the company.

CEO Gupta, along with Kumar and Malviya, collectively holds 22.6 percent of Udaan, while Microsoft, Noumra, and other stakeholders have the remaining equity. This infusion of funds will assist in propelling Udaan’s growth and prepare the groundwork for a potential IPO in 2025, a slightly adjusted timeline from earlier projections.

Udaan’s operational achievements in 2022 underscore its significance in the e-commerce landscape. The company shipped over 1.7 billion products to 1200 towns and cities, fulfilling 22 million orders.

The essentials category, covering fresh, FMCG, and staples, saw 17 million orders, with over 9 lakh tonnes of products shipped. Meanwhile, the discretionary category, encompassing electronics, general merchandise, and lifestyle, contributed 131 million products catering to 2.5 million orders.

“We believe Udaan has the right operational platform to be the trusted partner of scale to small businesses across India by empowering them with technology, financial inclusivity, and supply chain capabilities. Our investment strategy aligns with Udaan’s ambition to simplify and increase efficiency in a congested B2B market,” Niranjan Sirdeshpande, (EMEA) Director, M&G Catalyst, said.

Vendor Success on the Platform

Udaan’s platform proved lucrative for sellers, with 586 achieving sales worth INR 1 crore each in 2022. Impressively, 174 sellers conducted business worth INR 2 crores on the platform, highlighting the platform’s efficacy for diverse sellers.

The Series E funding, led by M&G Plc and supported by existing investors, came when Udaan experienced a valuation adjustment from a peak of $3.2 billion to below $2 billion. Undeterred by market fluctuations, the company remains committed to its eB2B focus amid cost-cutting measures and organizational changes.

“We believe it has the right operational platform to be the trusted partner of scale to small businesses across India by empowering them with technology, financial inclusivity, and supply chain capabilities. Our investment strategy aligns with udaan’s ambition to simplify and increase efficiency in a congested B2B market,” Niranjan Sirdeshpande, (EMEA) Director, M&G Catalyst, said.

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