Udaan secures $340 million in debt, equity from M&G Plc, other existing investors

With this exercise, udaan’s business is fully funded and on course to achieve its objective of becoming profitable in the next 12-18 months.

B2B e-commerce unicorn udaan has raised $340 million from M&G Plc. Existing investors like Lightspeed Venture Partners and DST Global also participated in the Series E round. The round is a mix of debt and equity, the company said on December 14.

The company, however, did not provide details of debt-equity split. Along with a fresh equity component, the company has also converted its old and existing debt (convertible notes) into equity.

While the company did not comment comment on its valuation, udaan has seen its valuation drop from a high of $3.2 billion to below $2 billion.

Bengaluru-based udaan will use these funds to strengthen customer experience, market penetration, strategic vendor partnerships, and better its supply-chain capabilities. The fresh capital will also be used to grow its loan book, the company said.

“(The) Series E round strengthens our balance sheet and fully funds our business plan. It enables our continued journey of growth and profitability, positioning us well to be public-market ready in the next 12-18 months," said Vaibhav Gupta, Co-founder and CEO in a media statement.

In an interview earlier, Gupta said that udaan would IPO in 2025. While those timelines have moved a bit, udaan has been on a cost cutting spree.

Over the past year, udaan has also trimmed costs by letting people go, as reported earlier. In an organizational rejig, the company also lost its CBO and CTO.

"We are extremely excited to continue supporting udaan as it further strengthens its leadership as India's largest EB2B marketplace. We believe this financing puts the company on an extremely strong financial footing and on course to further improve profitability while empowering small businesses across Bharat,” said Bejul Somaia, Partner, Lightspeed Venture Partners.

The company's conviction in eB2B comes despite other players like DealShare have shuttered their B2B units and are instead focusing on B2C.

“M&G is pleased to support udaan as it pursues a profitable growth strategy. We believe it has the right operational platform to be the trusted partner of scale to small businesses across India by empowering them with technology, financial inclusivity, and supply chain capabilities. Our investment strategy aligns with udaan’s ambition to simplify and increase efficiency in a congested B2B market,” Niranjan Sirdeshpande, (EMEA) Director, M&G Catalyst, said.

This comes at a time when udaan, which sells groceries and other products to kirana stores who further resell to customers, saw its revenue from operations shrink by 43 percent from Rs 9,897.3 crore in FY22 to Rs 5,609.3 crore in FY23.

At the same time, the company managed to narrow its losses to Rs 2,213 crore in FY23 from Rs 3,075.8 crore in FY22.

Founded by former Flipkart executives, Sujeet Kumar, Amod Malviya and Vaibhav Gupta in 2016, Udaan has raised over $1.8 billion from investors like Tencent, DST Global and several others, as per Tracxn, a private markets data provider.

While Kumar and Malviya stepped down from active roles in 2022, they continue to hold equity in the company. CEO Gupta, Kumar and Malviya collectively hold 22.6 percent in Udaan, while Microsoft, Noumra and others hold the remaining, Tracxn showed.