Dukaan, an app which helps small merchants to set up online stores, has raised $11 million in a pre-Series A round of funding led by US-based 640 Oxford Ventures. The company is also in talks to raise another $50-70 million in the next round.
In an interaction with Moneycontrol's Priyanka Sahay, Dukaan co-founder and chief executive officer Suumit Shah spoke about the need for digitising retailers, upcoming funding round and the company's expansion plans. Edited excerpts:
How will you spend the money raised?
We will be accelerating our hiring, 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 within this quarter.
Tell us about the technology upgrade?
Setting up your store is the first part. Once that is done, you need more and more ways to grow your revenue. That means you have to be present across all the different channels like Facebook and Google and so on. What will happen is you as a seller will get more tools to get more reach for the products or services that you are selling.
Secondly, a lot of sophisticated features would come in the picture. For instance, people who are already doing more than Rs 20 lakh of revenue, these people would be able to leverage tools like GST invoice generator and so on which are targeted towards a specific group of users.
There would be themes. Imagine if you are a fashion blogger who is trying to sell the kurtis online, so your fashion platform has to look different as compared to how the grocery store looks. You will get 100s of themes which are customisation you can upload your own colour scheme and logo and branders.
The third one, which we are in the process of developing, is the whole payments layer. We started giving this feature called online payments in the month of January where sellers can just link their UPI ID with Dukaan and start accepting payments through credit card, debit card, UPI wallets or any other payment method.
In January we saw just 1.5 percent were happening online but now that 1.5 percent has grown to 26.6 percent. So we see a huge potential in facilitating all the payments to all the merchants.
Also read: Dukaan steps into e-commerce space to bring neighbourhood stores online
You were also in talks with Tiger Global. Did that deal not materialise or is it still in works?
There are more than 20 investors who have reached out weighing the potential of investing in Dukaan. Funds like Tiger we will evaluate for the next round assuming the current round size and the valuation.
What does the next round look like? How much are you raising?
For the next round, the whole focus will be going on the transacting merchant base and of course our revenue. We have already started with monetisation couple of months back. The focus will be on getting the transacting merchant base and building all the revenue streams.
We started with the monetisation just three-four months back and are already at $7,00,000 ARR and we haven't even started the monetisation on 100 percent of users, just a small set of users.
So from that angle both transacting user base and revenue is going to grow exponentially in the coming months. So the next round is of course going to be huge, probably more than $50-70 million.
When should that happen?
Not sure, whenever we find the right partners.
But that is already in the works, right?
Yeah, I have had a couple of calls with a bunch of people who already reached out to us. We are evaluating as to which ones would make sense for us. There are active talks happening. Won't be able to comment on the timeline.
How do you see retail digitisation evolving from here?
If I look at the same industry just one-two years back, people adopting digital solutions was just an option. A lot of people didn't understand the value of e-commerce and having the business digital. Since Covid, the whole equation has changed. It is not an option anymore but the basic fundamentals and that's how the businesses are going to flourish in the coming years.
Khatabook recently raised $100 million. Is there pressure on Dukaan to raise more money?
Don't think there is pressure as such. We don't have any competition with Khatabook at all. Khatabook is just helping people with bookkeeping, while we are helping them with the commerce angle.
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