Udaan secures fresh debt from EvolutionX after recent fundraise

NEW DELHI: Business-to-business (B2B) marketplace Udaan has raised close to $40 million in fresh debt funding from early-stage financier EvolutionX Debt Capital, a person aware of the development told Mint. The investment follows the $120 million fundraise by the company a fortnight ago.

“With this, the total funds raised by Udaan in the last four quarters have reached $400 million,» the person cited above said.

The debt funding, alongside Udaan’s recent capital raise, will improve the company’s financial strength as well as continue to drive its operational efficiencies with an enhanced focus on achieving profitable growth, EvolutionX said in a release.

In early November, EvolutionX had announced its maiden debt investment in API Holdings, the parent company of PharmEasy.

In January, Udaan raised $250 million, comprising $200 million worth of convertible notes or short-term debt that can subsequently be converted to equity and $50 million of debt. M&G Prudential, Kaiser Permanente, Nomura, TOR, Arena Investors, Samena Capital and Ishana Capital backed the firm in the round which saw Microsoft Corporation’s participation in April.

Founded in 2016 by former Flipkart employees Amod Malviya, Sujeet Kumar, and Vaibhav Gupta, Udaan is a B2B trade platform catering to small and medium businesses in India.

Traders, wholesalers, retailers, and manufacturers can connect on Udaan’s platform, where they can look for customers, suppliers, and products across categories and communicate with one another directly for the lowest price.

The platform has over 3 million retailers registered across various categories including lifestyle, electronics, home and kitchen, staples, fruits and vegetables, FMCG, pharma and general merchandise.

The company is backed by the likes of Octahedron Capital, Moonstone Capital, Lightspeed Venture Partners, DST Global, GGV Capital, Altimeter Capital and Tencent, among others.

Udaan aims to go public over the next 12-18 months, the company’s chief financial officer Aditya Pande had told employees in an internal email sent last month.

“We believe in efficiency as a driver of profitable growth and will continue to refine our cost structures and models. In this direction, we have taken numerous steps, with enhanced digital capabilities, to achieve efficiency and scale, become more agile and remain competitive in the marketplace,» the email said.

The company’s unit economics improved by around 1,000 basis points with equally strong improvements in gross margins and operating cost, Pande pointed out in the email reviewed by VCCircle.

“The journey of right business design and unit economics has translated into more than 60% reduction in the burn,» the mail read.

Earlier this month, Udaan said that it was firing up to 350 employees in a second round of layoffs since June, as the startup aimed to boost efficiency and achieve profitability.

“As we move forward in our journey towards making Udaan a profitable company, the efficiency enhancement drive and the evolution in business model has created some redundancies in the system, with some roles no longer required,» the company had said.

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