Analysis: Udaan increases series D

India-based B2B e-commerce platform Udaan raised an additional $280m to its series D round, which includes internet group Tencent and financial services firm Citi among backers. The round now totals $865m, reportedly at $3.1bn post-money valuation. Tencent was among the investors taking part in this second tranche. Citi had participated in the first tranche of the round, sized at $585m and reported in October 2019. Other backers in the round included Octahedron Capital, Moonstone Capital, Lightspeed Venture Partners, GGV Capital, Altimeter Capital and partners of DST Global. The fresh funding will be used to continue expanding the company’s low-cost model throughout India.

Founded in 2016, Udaan runs an online marketplace where businesses can source a host of goods from wholesalers, giving them access to a wider range of products via a more transparent pricing structure. The company claims to have 3 million retailers, small and medium-sized businesses signed up to its platform. Udaan also supplies working capital to those users and customers.

The company is part of the larger e-commerce space, which was indubitably given a boost by the pandemic and stay-at-home orders around the world. While e-commerce tends to be associated with business-to-consumer platforms, much of the e-commerce taking place globally is actually done between businesses. According to GCV Analytics, as shown on the bar chart below, neither the number of corporate-backed deals in pureplay e-commerce businesses nor the total estimated capital in them registered a substantial increase in 2020 versus previous years. In fact, the former decreased by 10, whereas the latter was up only slightly (4%). This can be explained away by several factors. E-commerce businesses were likely not in a frenzy to raise additional capital given the revenue boost from the pandemic, on the one hand. On the other, venture investors – including corporates – may have found valuations not so attractive for the very same reason.