M&G Catalyst, the investment arm of the UK retail bank M&G, has spearheaded a monumental funding round, injecting $340 million into Udaan, a prominent Indian business-to-business (B2B) e-commerce startup. This funding, one of the largest secured by an Indian startup in 2023, marks a significant milestone for Udaan, positioning it as fully funded and on track to achieve profitability within the next 12-18 months. The Series E funding round also includes participation from existing backers Lightspeed Venture Partners and DST Global.
Udaan’s Business Model and Growth
Headquartered in Bengaluru, Udaan operates as a platform that empowers merchants in smaller Indian cities and towns by facilitating access to inventories from major brands and providing avenues for working capital. The startup, founded by three former Flipkart executives, has steadily grown its reach, connecting thousands of sellers with over 3 million retailers across a diverse range of product categories, including grocery, fruits and vegetables, fast-moving consumer goods (FMCG), lifestyle, electronics, home and kitchen, and pharmaceuticals.
Udaan’s unique approach targets the vast network of kirana stores, playing a crucial role in serving the tens of millions of small retailers that form the backbone of India’s commerce landscape. By bridging the gap between sellers and retailers, Udaan has become a key player in India’s eB2B market, with a mission to empower small businesses and tap into a substantial $100 billion market opportunity.
Funding Round Details
The $340 million funding round led by M&G Catalyst is a testament to Udaan’s strategic vision and market positioning. The startup plans to utilize the funds to further enhance its operational efficiency, expand its regional presence, and solidify its standing as a trusted partner for small businesses across India. This funding round, Udaan’s first equity round since 2021, is crucial in ensuring the startup’s financial stability and readiness for an anticipated initial public offering (IPO) in 2025.
Despite the absence of specific details regarding Udaan’s valuation in the latest round, it is evident that the startup has made significant progress since its $3.1 billion valuation in 2021. The funding round also underscores the confidence of investors like M&G Catalyst, Lightspeed Venture Partners, and DST Global in Udaan’s potential for sustained growth and profitability.
Market Dynamics and Future Outlook
Udaan operates in a competitive landscape, contending with industry giants such as Mukesh Ambani’s Reliance Retail. The startup’s success in securing funds and its commitment to becoming profitable in the near term position it as a formidable player in the Indian e-commerce scene. The strategic use of funds, coupled with Udaan’s commitment to serving small businesses, showcases its dedication to simplifying and enhancing efficiency in the congested B2B market.
As Udaan eyes an IPO in 2025, its journey from a Bengaluru startup to a nationally recognized e-commerce platform is indicative of the broader trend in India, where numerous companies are striving to empower the vast network of kirana stores and small retailers. Udaan’s impact extends beyond just connecting sellers and retailers; it represents a transformative force in reshaping the dynamics of B2B commerce in India.
Investor Perspectives
Niranjan Sirdeshpande, (EMEA) Director at M&G Catalyst, expressed the firm’s belief in Udaan’s operational platform to be a trusted partner for small businesses across India. Lightspeed Venture Partners, a significant investor in Udaan, sees this financing as a key step toward improving profitability while empowering small businesses. The backing from these investors underscores the strategic alignment with Udaan’s mission and the potential they see in the startup’s future endeavors.
Udaan’s $340 million funding round, led by M&G Catalyst, stands out as a landmark event in the Indian startup landscape. The startup’s commitment to empowering small businesses, coupled with its strategic use of funds, positions it for continued success in the dynamic B2B e-commerce market. As Udaan gears up for an IPO in 2025, its journey from inception to becoming India’s largest eB2B marketplace serves as a testament to the transformative impact of startups in reshaping the country’s business landscape. The backing of prominent investors further reinforces Udaan’s potential for sustained growth and innovation.