Business-to-business e-commerce company Udaan has raised $250 million in fresh capital via convertible note and debt. The firm that helps retailers secure inventory and working capital picked up $200 million in convertible notes and the rest through debt.
A convertible note is short-term debt that converts into equity and will help the company as it prepares for an initial public offer in the next 18-24 months.
In an e-mail to employees reviewed by CNBC-TV18, Udaan's chief financial officer Aditya Pande said, "We are excited and glad to share that we have 5 new marquee investors coming onboard the Udaan juggernaut, as part of our recently concluded convertible note financing. The 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."
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A convertible note is an instrument typically used by companies at the pre-IPO stage, and the instrument converts into equity at the IPO. Large-scale tech companies that have successfully used convertible notes include Airbnb, Uber, Spotify, Robinhood, etc, the e-mail said.
The fundraise reflects Udaan's "broadening the capitalization strategy" as it charts its journey to the public markets and beyond. "With this convertible offering, we, as a company, have started building a completely new muscle in our finance function - which we will continue to strengthen as we go forward”, Pande’s note to employees said.
Backed by Lightspeed Ventures, Tencent, DST Global, GGV Capital, and InnoVen Capital among others, the platform has raised $1.4 billion in funding so far and was last valued at $3.1 billion. In CY21, the unicorn raised over $500 million from investors.
"The total funds raised by Udaan through debt and convertible note through just the last quarter of 2021 has crossed $250 million, setting us up well to continue executing our strategic agenda," Pande added.
In September 2021, Udaan rejigged its top management and appointed co-founder Vaibhav Gupta as its chief executive officer to help steer the company in a bid to create a "future-ready organization".
Co-founders Amod Malviya and Sujeet Kumar continue on the board and work with Vaibhav to "ensure that the organization is able to achieve their shared vision for the organisation".
The Bengaluru-based company was founded in 2016 and currently has over 3 million users, 1.7 million retailers, and 30,000 sellers on the platform covering 900+ cities and over 12000 pin codes. It has operations across categories including lifestyle, electronics, home & kitchen, staples, fruits & vegetables, FMCG, pharma, toys and general merchandise.
(Edited by : Jomy Jos Pullokaran)
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