With $225 Mn Funding, Ex-Flipkartians’ B2B Online Marketplace Udaan Becomes India’s Fastest Unicorn

Bengaluru-based a business-to-business e-commerce portal Udaan- formed by three Ex-Flipkartians,  has become the latest entrant to join India’s unicorn club. The B2B portal has recently scooped up $225 million (Rs 1,575 crore) from Russian internet billionaire Yuri Milner’s DST Global and Lightspeed Global  Growth, valuing the two-year startup at $1 billion and also the startup has raised  the $1 Bn valuation within 26 months of its launch, thus making it the fastest company to reach the unicorn status.

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In its $50 million series B funding which was raised in febraury 2018. The round was led by Lightspeed US, while Lightspeed Venture Partners India and funds associated with Russian billionaire Yuri Milner also participated. The $50 billion raised with series B funding is like heels to $225 Mn funding. Therefore in less than a year the valuation of Udaan has witnessed a four-fold increase as the previous two rounds (Series A and Series B) raised at a valuation of $40 million and $220 million respectively. Also the investment was confirmed by Sunil Rao, the Partner at Lightspeed India. 

Previously in November 2016, Lightspeed Venture Partners India and Lightspeed US in a Series A funding round helped the startup raise $10 Mn.

Progress of Udaan in the past 26 months  

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Founded in 2016, with headquarters in Delhi, Udaan was formed by three former Flipkart enployees — Sujeet Kumar, Vaibhav Gupta, and Amod Malviya. Udaan runs a web platform wherein it helps connect traders, retailers, wholesalers, and manufactures. The company follows an asset-light model, which is currently operating in two categories- Mobile accessories and Fashion products.

Udaan, with best deals help businesses detect customers, suppliers and products across categories and helps them connect directly with each other. Also secured payments and logistics are offered in this platform when it comes to buying and selling. Escrow protection for seamless payment and round-the-clock seller and buyer support is also provided here. 

Registrar of Companies stated that, Udaan posted the gross revenue of Rs. 1.69 Cr. in 2016-17 but didnot generate any operational revenue as it was incorporated in June 2016.  The company had started it's formal operations during the second half of the calender. Udaan had incurred gross expenditure of Rs 7.57 Cr. and the company incurred net losses of Rs 5.88 Cr during the financial year.

According to an April 2016 report by the Confederation of Indian Industry and Deloitte, the founders are looking to disrupt the overall B2B market in India, which is expected to be around $700 Bn by 2020. Also the plans of Udaan includes building it's own supply chain, which will involve setting up large warehouses so it can offer better rates with improved reliability of shipments. It is also building a lending play by which it will underwrite working capital loans to buyers on the platform. 

Currently, Udaan is picking up products from manufacturers and sellers in 80-100 cities and delivers across 800 cities and towns across the country with an average order value between INR 6K-7K.

A few more B2B ecommerce startups have recently raised capital, including Nandan Nilekani-backed ShopX ($35 million from Fung Strategic Holdings), and OfBusiness ($30 million from Creation Investments). But no company has been able to scale up as fast as Udaan and some startups in the space have even had to shut operations. Power2SME and Indiamart, though, have been operating in the space for years. Indiamart is planning an IPO this year.

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