Agritech Waycool in talks to raise $40 million in internal funding round led by Lightrock

Waycool

Agritech startup Waycool is in talks with existing investors to raise $40 million in an internal round led by Lightrock. The move comes after a larger round from external investors failed to materialise, sources said.

While Moneycontrol initially picked up that Waycool was lining up $15-20 million in capital, the company, in response to our queries, said the round was much larger at $40 million with participation from Lightrock and other existing investors.

"We are in the process of raising a $40 million round through a rights issue with Lightrock being the anchor. The round is close to getting fully subscribed as we are getting good traction from institutional investors, as well as family offices. We intend to close it in the next few weeks," a spokesperson for Waycool told Moneycontrol on November 9.

Its existing backers include Lightbox Ventures, Redwood Equity Partners, Huruma Fund, Innoven Capital and World Bank Group’s private investment arm International Finance Corporation.

The additional capital will help the Chennai-based company navigate its liquidity challenges, sources said.

Waycool, which was valued at around $700 million in its last equity round in June 2022, however, might not see an uptick in the valuation, sources said, as the new round would either be a bridge or a down round.

"The purpose of this round is to further strengthen our consumer brands’ momentum. This influx of capital will further our efforts in propelling the company's growth. A larger funding round continues to progress at the desired pace, and is currently undergoing documentation," the company spokesperson added.

Funding blues

In June, reports said Waycool was in talks with sovereign wealth funds, impact funds and family offices to raise $50-70 million in primary capital and that the deal would be closed by August or September but the company is yet to see that money.

It did not receive much interest from new investors, which delayed the fundraise, sources told Moneycontrol. It is unclear if the larger round would come through.

Founded in 2015 by Karthik Jayaraman and Sanjay Dasari, Waycool is a full stack platform which includes services like high volume trading of raw agri-produce and processed commodities, logistics and distribution solutions, private label packing and houses farmer engagement platform Outgrow, FMCG subsidiary BrandsNexxt, and supply chain tech platform Censa.

With a whole host of services under Waycool’s umbrella, the company needs uninterrupted liquidity to operate as is the case with rivals like DeHaat and Ninjacart in the agritech space. Waycool has raised around $310 million, so far, from a clutch of investors.

Like many agritech companies, especially startups, Waycool is a loss-making venture. The company, however, plans to become profitable and IPO by 2025, CEO Jayaraman said at a recent media conference.

While Waycool is yet to file its FY23 results, in FY22, its revenues came in at Rs 927 crore, a jump from Rs 382 crore in the previous year but losses widened 2.4X to Rs 360 crore.

The losses widened on higher expenses, which stood at Rs 1,289 crore in FY22, up from Rs 535 crore in FY21. The company is looking to cut costs. It laid off about 300 employees and also closed some of its new experiments to focus on the core business.

"In the last 18 months, we have restructured the company to fast-track our journey towards profitability focusing on our core prowess. We are confident of breaking even in the beginning of Q4 of the current fiscal. This achievement is attributed to the substantial traction our brands have gained, not only in dry groceries but also in the fresh produce sector," Waycool's spokesperson added.

The company says it is present in over 850 towns in South India and is the market leader in many of these areas.