Dukaan, an app that helps small offline merchants set up online stores, has raised $11 million in a pre-Series A funding round led by US-based 640 Oxford Ventures.
HOF Capital, Old Well Ventures, LetsVenture, 9Unicorns and a number of high-profile executives, including Oyo’s Ritesh Agarwal and Carl Pei, Co-founder and the CEO of Nothing, participated in the round. Other participants include existing investors Snow Leopard Ventures, Lightspeed Partners and Matrix Partners India.
Founded by Suumit Shah, Subhash Choudhary, Kaustub Pandey and Anurag Meena in June 2020, Dukaan is among a slew of startups looking to digitise small businesses and take retail (kirana) stores online.
As the economy inches back towards a new normal, the retail small-business segment, the backbone of the country’s economy, is seeing a steady revival.
Digitisation of small businesses is an area that has attracted a lot of attention from investors, techies and entrepreneurs following the pandemic. As the government locked down the country, consumers switched to online platforms for food and groceries. This threw up new business opportunities for tech startups to help small merchants set up digital storefronts and accept orders online.
The first wave of these apps, including Khatabook and OkCredit, looked to digitise accounting for these merchants, helping them keep track of expenses and send payment reminders.
Last month, Khatabook raised $100 million in a Series C round led by US-based venture capital firms Tribe Capital and Moore Strategic Ventures, at a valuation of $600 million.
OkCredit, on the other hand, last announced fund-raise of $67 million in a round led by Lightspeed and Tiger Global two years ago.
Focus on local stores
Dukaan claims to have facilitated over 1.5 million transactions since its launch.
Earlier this year, the company also plunged into the consumer-facing e-commerce space.
Much like Swiggy, Zomato, BigBasket or Amazon, it started allowing customers to place orders with merchants on its website across the grocery, fruits and vegetables, food and retail categories, among others.
However, unlike the marketplaces, Dukaan said it would focus on neighbourhood stores.
"We will be accelerating our hiring and get more techies and designers which will accelerate our product development at the same time we will try to tap the unexplored merchant base. 98 are there presently and 100 more we are hiring," Shah told Moneycontrol in an interaction.
“We started our monetisation journey on a small merchant base last quarter, and more than 2,000 merchants have enrolled in our Dukaan premium subscription plan so far. Premium subscription is just one of the revenue streams, and contributes 10 percent to our revenues,” he added.
The company was also in talks to raise $35-40 million led by Tiger Global Management, the US-based fund, for a valuation of $300 million. Moneycontrol reported on this development in April.
Confirming that the talks with Tiger Global was still on, Shah said "There are more than 20 investors who have reached out weighing the potential of investing in Dukaan. Funds like Tiger we'll evaluate for the next round assuming the current round size and the valuation."
"The next round is going to be $50-70 million. There are active talks happening. Won't be able to comment on the timeline," he added.
Big opportunity in small business
“There is a massive white space opportunity to service the commerce needs of India’s 100 million small businesses, and the Dukaan team, with its strong product orientation and deep knowledge of the small-business user, is ideally positioned to lead the creation of new categories of commerce businesses in India,” said Akshay Bhushan, Partner, Lightspeed.
The company claims to be having over 3.5 million small and medium-sized businesses across India. It helps them to start, grow, market, and manage their business over the internet in over 40 business categories.
It last announced a $6 million fund-raise in a seed round from Matrix Partners and Lightspeed Partners in October 2020.