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Exclusive | Tiger Global in talks to back less than a year-old Dukaan at $300 million valuation

Tiger continues its dealmaking frenzy in India, armed a new $6.7 billion fund. Its latest investment Dukaan is seen by investors as one of the most promising startups in recent times

Mumbai / April 20, 2021 / 07:54 AM IST

Dukaan, an app which helps small offline merchants set up online stores is in talks to raise $35-40 million led by Tiger Global Management- the US-based fund whose dealmaking frenzy has taken the Indian internet ecosystem by storm- sources said.

Dukaan will be valued at about $300 million, a nearly fifteen times jump in its valuation from less than six months ago, these people said, requesting anonymity. It raised $6 million led by  Lightspeed India and Matrix Partners India and was valued at about $22 million.

Founded by Suumit Shah, Subhash Choudhary, Kaustub Pandey and Anurag Meena last year, Dukaan is among a slew of startups looking to digitise small businesses and take retail (kirana) stores 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.

Tiger declined to comment while Shah did not respond to queries seeking comment.

Dukaan originally started as a backend technology provider for these merchants, but has recently forayed into its own app becoming a digital storefront for these kirana stores, similar to delivery firms Swiggy and Dunzo, which connect customers to retail outlets. The store has to figure out its own logistics- using say Shadowfax or Shiprocket- with Dukaan providing discovery and ordering ability, Moneycontrol reported on March 23.


"There is always a trust between you and your existing merchant. So we are focusing on bridging the gap of technology by offering the tools to your local vendors so that he can start generating orders from you online. We just want to arm the small merchants so that they can go and fight with Amazon and Flipkart," co-founder Suumit Shah said.

Dukaan has started monetising its core business of backend technology, said one person aware of the matter, although Moneycontrol couldn’t ascertain exact figures. For the digital storefront on its app, Dukaan plans to make money either by charging a subscription fee to the store, or by charging for ancillary services such as generating tax invoices.


Dukaan has about 4.4 million downloads and is used in over 1800 cities, as per its website


Dukaan and Sequoia Capital-backed Khatabook were also embroiled in controversy late last year, where Dukaan accused Khatabook of stealing and copying its platform and sent a legal notice citing trademark violation. Khatabook had a near identical offering called Dukaan by Khatabook.It became an ugly fight where Khatabook responded citing intellectual property theft and Dukaan claiming Khatabook took down Dukaan related videos from YouTube. The two companies settled the matter with Khatabook taking a small equity stake 


Internet fims digitising small businesses is seen as a huge opportunity by investors, although most of these firms are yet to make any money. Some of them plan to lend to these SMEs in the future, with financial services being their main income source, although this model has not been proven yet. 


“The theory is that you solve for distribution and become huge, even if you’re giving it out for free. Once you are big enough, you can make money by lending or subscriptions. But whether small merchants are willing to shell out money for this is a big question,” said an investor in the space, requesting anonymity.


BharatPe, which began as an aggregator of QR codes for digital payments has been the only one among a litany of players who has actually gone from free distribution of its app, to actually lending and making money off it. It is even looking to acquire troubled lender PMC Bank as a way to get a banking license.


Tiger’s investment continues its dealmaking frenzy, where in the last three months alone include B2B marketplace Infra.market, social network ShareChat, investment app Groww, business messaging firm Gupshup, among more than two dozen others. In all the above deals, Tiger’s investment has made the firm a unicorn- valued at a billion dollars, before many expected them to be.


Earlier this month, Tiger closed a $6.7 billion fund- bigger than many major Silicon Valley and Chinese investors- to invest in technology firms.
M. Sriram
first published: Apr 20, 2021 07:54 am

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