B2B e-commerce unicorn Udaan, based in Bengaluru, has raised Rs 300 crore in debt funding from leading investors Lighthouse Canton, Stride Ventures, InnoVen Capital, and Trifecta Capital. This is the first debt financing for Udaan in the financial year, a strategic step to fortify its financial stability as it gears up for aggressive growth in the changing Indian e-commerce landscape.
Micro Markets Expansion
This new capital would enable Udaan to increase its market presence at a pan-regional level through what can be called a “Micro-Market Strategy”. It would thereby expand its footprint and establish connections to the remaining SMBs with high growth potential through an already massive network that covers over 3 million retailers across more than 900 cities. This will enable Udaan to reach more customers and fuel adoption among Kirana stores and small retailers across India, especially as these regions become stronger players in the B2B e-commerce space.
Operational Efficiency and Cost Savings
Udaan is looking to use the revenues that are generated from funding towards increasing the efficiency of its chain of supply operations which shall enhance delivery efficiency along with increasing GTM capabilities. It wants to scale the micro-fulfillment center network in ways that offer it more service offerings to its customers and improve the overall work associated with logistics. It very much aligns with what the company intends through these operations, which include gaining operational excellence besides gaining through cost savings. This somehow is strange as the EBITDA burn has come down to 30%.
Financial Milestones and Profitability Targets
Udaan has kept its focus on the profitability journey. In the past two to three years, the company has been working hard on financial performance improvements. In FY24, it saw a 60% rise in revenue and a 50% rise in daily transacting buyers, thereby improving market penetration. However, gross revenue in FY23 stood at Rs 9,900 crore and reduced to Rs 5,629 crore while net losses had reduced by 33.7% to Rs 2,076 crore. The firm has also strengthened its gross and contribution margins, thus its financial position.
Ankit Agrawal, Executive Director, Lighthouse Canton stated about Udaan’s approach “We are excited to partner with Udaan as they continue to transform the B2B landscape in India.” Kiran Thadimarri, Senior Vice President of Group Finance of Udaan added to this that this fund shall enable Udaan to focus on key initiatives like cluster model to enhance operational performance and consolidate its market leadership.
This substantial debt funding will help Udaan drive sustainable growth, its streamlined operations, and further push toward profitability while significantly contributing to India’s small business ecosystem through expanded market access.
