Udaan Raises $75 Million from M&G and Lightspeed, Awaits $25 Million More

Bengaluru-based B2B ecommerce firm Udaan has raised $75 million from existing investors UK-based M&G Prudential and Lightspeed at a flat valuation. During a town hall meeting on Monday, Udaan CEO Vaibhav Gupta informed employees that an additional $25 million could be secured in the upcoming quarter.

The latest funding round comes as Udaan continues its efforts to stabilize operations, while several B2B ecommerce players, including OfBusiness, Infra.Market, and Zetwerk, are preparing for public listings. The company, which faced a 44% valuation drop to approximately $1.8 billion in 2023, has not disclosed its current valuation. The fresh investment marks Udaan’s first significant equity raise since 2021. In December 2023, the company converted $340 million in debt into equity.

Lightspeed, holding nearly 40% ownership, remains the largest shareholder, while M&G Prudential, which previously owned about 15%, is expected to increase its stake with this investment. In October 2024, ET reported that M&G Prudential was in discussions to lead an $80-100 million funding round, aiming to strengthen its position as Udaan’s second-largest shareholder.

Founded in 2016 by Vaibhav Gupta, Sujeet Kumar, and Amod Malviya, Udaan has been undergoing significant restructuring and cost optimization efforts for the past 7-8 quarters. During the town hall, Gupta emphasized the company's ongoing focus on cost optimization and operating efficiency.

While Sujeet Kumar and Amod Malviya, co-founders of Udaan, have stepped back from daily operations for over two years, they remain on the company’s board. Malviya has also launched a separate venture. Despite restructuring its debt last year, the company still holds around $100 million in debt, but the repayment schedule has been extended, according to an ET report from October.

Udaan's current net merchandise value (NMV) run rate stands between $600-700 million, significantly lower than in previous years. The company has streamlined its operations by concentrating on core categories such as grocery, fresh produce, staples, FMCG, and dairy. Additionally, it has adopted a cluster-based market strategy, with Bengaluru and Hyderabad emerging as its largest markets, while also catering to surrounding towns.

The parent entity of Udaan, Trustroot Internet, is registered in Singapore. In FY24, the company reduced its losses by more than 19%, bringing them down to Rs 1,674 crore from Rs 2,076 crore a year earlier. Meanwhile, gross revenue saw a modest increase of just over 1%, reaching Rs 5,706 crore.

With a sharpened operational focus and an optimized cost structure, Udaan aims to navigate the challenging funding environment and establish a stable footing amid increasing competition in the B2B ecommerce space.