Udaan, the Bengaluru-based B2B ecommerce platform, is targeting a fresh funding round of $80-100 million, led by UK-based investors. The new investment is expected to maintain Udaan’s current valuation of around $1.8 billion, with negotiations already in the final stages.
This round of funding comes as Udaan continues to streamline its operations to manage costs in a tighter liquidity market. The company has sharpened its focus on select product categories and adopted a market cluster approach, particularly in regions like Bengaluru and Hyderabad, where it is focusing on grocery, staples, FMCG, and dairy. These operational changes are intended to boost efficiency and help the company achieve profitability.
According to sources close to the matter, the current funding round is crucial for Udaan as it seeks to strengthen its balance sheet and enhance profitability through improved EBITDA margins. The company has been growing its margins month-over-month while reducing its operating scale. Udaan’s net merchandise value currently stands at around $600-700 million, which is lower than in previous years, but the company remains focused on sustainable growth.
Udaan’s leadership, which includes co-founder and CEO Vaibhav Gupta, has been working to restructure the company’s debt and operations. The company still holds about $100 million in debt, but repayment timelines have been extended. The company has also undergone management changes, with co-founders Sujeet Kumar and Amod Malviya stepping back from daily operations, although they continue to hold board positions.
The funding round is Udaan’s first major equity raise since 2021. In a previous round in December 2023, the company raised $340 million through debt-to-equity conversion. This new injection of capital is expected to support Udaan’s path toward profitability.
Udaan’s parent company, Trustroot Internet, is currently domiciled in Singapore, but there are plans to shift the company’s domicile to India, possibly in preparation for an IPO in the coming years. Financial reports indicate that Udaan has reduced its losses in FY23, with gross revenue for the year standing at Rs 5,629 crore, down from previous levels, while also trimming losses to Rs 2,075 crore.
As Udaan continues to refine its strategy and operations, this new round of funding will be critical in achieving its financial goals and expanding its market presence. The company’s focus remains on driving profitability and optimizing its operational scale.