Business-to-business (B2B) e-commerce startup Udaan on Thursday said it has raised $340 million in a funding round led by UK savings and investment firm M&G Prudential.
The round also saw participation from existing investors, including Lightspeed Venture Partners and DST Global, the firm said in a statement.
It declined to comment on the latest valuation but ET had in October reported that it would be a down round and the Bengaluru-based company’s valuation may slip below $2 billion.
A down round is when a company raises new funding at a valuation lower than its last round of financing.
After its last equity round in 2021, when it had raised $285 million, Udaan was valued at $3.2 billion.
ET first reported on talks between M&G Prudential and Udaan on October 20. To be sure, Udaan was looking to raise over $400 million in this round.
The latest fundraising is a combination of fresh equity as well as the conversion of existing debt in the form of convertible notes into equity.
M&G Prudential and others who had invested in the firm last year through convertible notes will now fully convert the debt into equity in this round.
Udaan was among the first set of companies to have tapped convertible notes to safeguard their valuation when a funding winter had started to set in India.
“The Series E round strengthens our balance sheet and fully funds our business plan. It enables our continued journey of growth and profitability, positioning us well to be public-market ready in the next 12-18 months,” Vaibhav Gupta, cofounder and CEO of Udaan, said in the company statement.
Started by former Flipkart executives Gupta, Amod Malviya, and Sujeet Kumar, Udaan has been significantly scaling down operations to cut its burn amid a tightening liquidity market, while also realigning its priorities to focus on profitability. Both Malviya and Kumar have stepped away from day-to-day operations at the firm.
From a peak of about $4 billion in gross merchandise value (GMV) run-rate after the pandemic, the company is said to be currently on an annualized GMV run-rate of $1-1.5 billion, people aware of the numbers said.
Niranjan Sirdeshpande, director for EMEA at M&G Prudential, said the fund wanted to support Udaan in pursuing a profitable growth strategy. “We believe it (Udaan) has the right operational platform to be the trusted partner of scale to small businesses across India, by empowering them with technology, financial inclusivity, and supply chain capabilities.