BigBasket to close $150 million deal with Unicorn tag

The unicorn buzzer is on again, and this time it's Bengaluru based grocery delivery startup BigBasket that is going to cross the $1 billion valuation.

The grocery and micro delivery startup is in the final leg of raising a $150 million round, and the pre-money valuation for this is going to be the benchmark billion.

This round is being led by Alibaba, which is an existing investor putting in around $50 million as per media reports. Two new investors are also being onboarded in the round, namely, CDC Group run by UK govt, and Mirae Asset Global Investment from South Korea.

The only other Indian startup that CDC had invested in was Jabong, and now it’s BigBasket’s turn. The investor may also purchase some secondary shares from existing investors.

The deal is likely to close in a month after due diligence.

The grocery delivery market that the company operates in, has been seeing a large number of existing and new players entering in as it offers the advantage of creating a loyal customer base to them.

For Amazon and Flipkart, this was the reason grocery was being opted to be an inclusion in their business model. Grofers already has been the company’s largest rival in the market, which has been in talks to be raising $120 million itself.

BigBasket, last year had also forayed into micro delivery with BBDaily, after acquiring MorningCart and RainCan. This had resulted in an increase in the market value of the company.

With this investment, the operations of the company are expected to further expand and improve, making the fight for Grofers, Amazon, Flipkart even more difficult.

Grocery and micro delivery both are the cost-consuming business that only thrives with volume. With so many players in the market, the volume divides and creates a pile of losses for each of them.

However, BigBasket had been able to improve its financial performance in FY18 with a 35 per cent increase in revenue to Rs 1,606 crore and had controlled its losses by 53 per cent to Rs 310 crore. If the trend continues in FY19, BigBasket is on its way towards efficient growth.

Uncertainty still clouds the future as the company has also started delivering in categories like kitchen, home essentials, beauty products, has launched the express delivery services, and started a loyalty programme - BBStar - as well. All these are likely to have an imbalanced impact on the soon to be Unicorn.

The information is sourced from ET.