Udaan, a young B2B eCommerce platform in India, has raised over half a billion dollars in a Series D funding round counting China’s tech giant Tencent and the Venture Capital arm of US bank Citi among half a dozen investors.
Only 3 years old, Udaan was co-founded by 3 former senior Flipkart executives. The capital injection of £585 million is the largest ever seen for a B2B eCommerce platform in India and values the startup at around $2.7 billion.
The funds will go to bringing more kirana stores (neighbourhood stores), chemists and other small businesses to the online space through its marketplace.
In addition to Tencent and Citi, Altimeter, Footpath Ventures, Hillhouse, GGV Capital also invested. Existing investors Lightspeed Venture Partners and DST Global also took part.
Udaan’s B2B online marketplace connects small retailers with wholesalers and traders. The platform covers a wide range of categories from lifestyle, electronics, home and kitchen, staples and toys, to fruits and vegetables. Last year, it became the fastest company to reach unicorn status in India.
The startup has amassed over 3 million retailers and more than 25,000 sellers from 900 cities and towns in India. In the month of August alone, Udaan processed five million orders.
Small Businesses in India Facing a Tech Transformation
Retail in India is in a unique position with e-commerce still only accounting for just 3% of the overall retail market in the country.
Small businesses and so-called “mom and pop” stores dominate across tens of thousands of villages, cities and slums, despite US giants such as Walmart and Amazon spending billions to try and create business-to-commerce marketplaces in the region.
These retail giants have been further blocked from expanding to Indian markets after Google released tools last month to help these small stores create their online presence, by launching a dedicated business app on Google pay, TechCrunch reports.
In a statement, Martin Lau, president of Tencent, said, “Udaan’s unique approach can enhance the capabilities of millions of retail stores across India. It represents a powerful example of how technology can empower the business of small merchants, improve the efficiency of industries and bring benefits to consumers.”
Small businesses in India are also being boosted by local FinTech startups.
According to The Economic Times of India, in the nation, close to 40% of sales at a neighbourhood store are made on credit, but in recent years technology has slowly started to creep in and be adopted by this merchant base.
OkCredit is another young Indian startup aiming to help India’s SME’s go digital, but by moving their finances from paper to smartphone. The company recently raised $67million.
In a statement, Harsh Pokharna, Chief Executive of OkCredit and partner at Lightspeed, said “technology adoption in India will happen across sectors and segments. For the longest time, mSME as a segment was ignored but we have seen through Udaan, OkCredit and other Lightspeed investments in the SME space that tech usage is growing rapidly. Very excited and honoured to have a front-row seat in this journey!”