By Salman SH
B2B e-commerce start-up Udaan has secured fresh funding worth $200 million through a convertible note from five new marquee investors, according to an internal email sent to employees by its chief financial officer Aditya Pande. FE has reviewed the copy of the mail sent to employees on Wednesday.
A source aware of the development confirmed the funding but did not share details of the investors. Sources added that the $200-million round was oversubscribed by 2 times.
“We are excited and glad to share that we have five new marquee investors coming onboard the Udaan juggernaut, as part of our recently concluded convertible note financing. This round was oversubscribed 2x and also saw participation from our existing investors, including those who bought into the company through the secondary (ESOP) round in H1 2021,” Pande said in his email to employees.
A convertible note is a fundraising instrument that allows companies to raise structured debt which they can convert to equity shareholding for investors in a later timeline. Typically start-ups raise convertible notes when they prepare for an IPO; rather than paying back the loan with interest, investors get to keep preference shares post the listing.
Udaan CFO Pande said in the email that large-scale tech companies globally, including big names like Airbnb, Uber, Spotify, Robinhood etc, have successfully used this instrument to raise money prior to an IPO.
“This reflects our “broadening the capitalisation strategy” as we architect our journey for public markets and thereafter. With this convertible offering, we, as a company, have started building a complete new muscle in our finance function – which we will continue to strengthen as we go forward,” Pande added in his email.
Apart from the convertible note, Udaan had also raised debt worth $50 million from undisclosed investors in the last quarter of CY2021. Udaan also raised another $280 million in financing in its Series D funding round in January 2021 from new investors like Octahedron Capital and Moonstone Capital and previous investors Lightspeed, DST Global, GGV Capital, Altimeter and Tencent. To date, the start-up has secured close to $1.4 billion in funding from multiple investors and was last valued at $3.1 billion.
Bengaluru-based Udaan was founded in 2016 by former Flipkart executive Amod Malviya, Sujeet Kumar and Vaibhav Gupta. In September last year, Udaan had announced key managerial rejigs in which Gupta was elevated as CEO and the two other co-founders Malviya and Kumar were also appointed as board members.
In 2018, Udaan was the fastest start-up to earn the coveted unicorn status when it completed its Series C round worth $225 million. It currently sells merchandise to retail and other offline outlets across lifestyle, electronics, home & kitchen, staples, fruits and vegetables, FMCG, pharma, toys and general merchandise.
In an earlier press release, Udaan had claimed to have a network of over 3 million users on its platform spread across 900 cities who purchase merchandise from 25,000 sellers across the country. The start-up also operates a separate mobile app named Pickily which home delivers groceries and perishables direct to customers’ doorsteps.