Alpha Wave-backed 1K Kirana Bazaar has raised $2-3 million from existing investors in a bridge round to tide over its current phase of business slowdown, multiple sources in the know said. This comes a month after the start-up laid off 40 percent of its workforce.
The Kirana-tech start-up’s existing investors include Alpha Wave, Kae Capital and Info Edge, apart from prominent angel investors and start-up founders of Zetwerk and GoMechanic.
According to sources, the start-up had failed to raise a bigger round from investors like Alpha Wave in Series C as investors are increasingly focussing on profitability amidst a funding winter. 1K Kirana was in talks to raise a larger Series C round earlier this year, following its Series B round of $25 million in May 2022, sources said.
“This $2-3 million funding will help the start-up sustain the current tide,” said one of the sources.
Multiple sources said that the start-up was also exploring a possible sale to DealShare a couple of months ago.
"As a brand that's committed to build the largest mass market e-commerce platform in India, we are always on the lookout for companies that share the same ethos and vision," Sourjyendu Medda, Founder and co-CEO, DealShare told Moneycontrol.
He added, "Whenever anything formalises with anybody, we will share details with you. However, as a company, we don't respond to speculation."
Though Co-founder Kumar Sangeetesh had previously said that 40 percent of the staff was laid off, several employees said that it was atleast about 60 percent and over 600 employees who lost their jobs. To further cut costs, the start-up has recently shifted its office.
“ 1K Kirana, from May onwards gave up their previous office and shifted to a smaller space. It has about 150 employees now, down from 1,000-1,200 people. Full and final payments of previous employees are pending, and salaries of March too for some existing employees are yet to be cleared,” said one former employee.
Detailed queries sent to 1K Kirana did not elicit any response at the time of publishing. Any comments from the start-up will be updated later to reflect in the article.
Earlier in April, he had said, "We are currently in the process of restructuring as our growth forecasts have changed. We are changing our focus areas and moving out of a few geographies. Due to this, we have to let go of 40 percent of our employees. All the employees will be given severances and we will assist them with outplacements."
What went wrong?
Founded in 2018 by Sangeetesh, Abhishek Halder and Sachin Sharma, 1K Kirana’s business model involves partnering with offline kirana shops to organise them by providing its own branding and online access. The start-up even managed sourcing and distribution of goods selling at these shops, cutting off middlemen, in turn improving margins for kirana merchants.
According to one of the employees Moneycontrol had previously spoken to, 1K Kirana also paid the rent and electricity bills of these shops which added to its expenses. The start-up operates over 1,000 stores across Rajasthan, Punjab, Uttar Pradesh, Uttarakhand, Gurugram and Delhi.
Sources had said that the Gurugram-based start-up was burning a lot of cash in its day-to-day cash-heavy operations, which made investors uncomfortable.
“The company used to burn a lot of cash. Take the example of conveyance reimbursements. Employees with a salary of Rs 30,000 are filing Rs 40,000 as reimbursement, this used to be a common practice,” said another employee in April, who was let go last year, requesting anonymity.
(This article was updated to include DealShare's comments.)
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