Udaan raises $120 Mn via convertible notes and debt

Business-to-business e-commerce major Udaan has raised $120 million in convertible notes and debt led by existing shareholders and bondholders, according to an internal email sent by the company’s chief financial officer (CFO) Aditya Pandey.

Entrackr has seen the email sent by Pandey to Udaan’s employees.

With this, Udaan has raised $350 million in convertible notes and debt in the past year. Microsoft Corporation also joined its previous debt round in April this year.

The debt round has come at a time when the company is finding it hard to raise equity capital. According to analysts tracking the company, the fresh infusion demonstrates the fact that existing investors are still bullish about the company.

Udaan is one of the top-funded companies among Indian startups in the past few years. According to Fintrackr, it has raised around $1.4 billion and was valued at $3 billion as of January 2021.

While Udaan is yet to file its annual financial statements for FY22, its operating income soared 6X to Rs 5,919 crore in FY21 from only Rs 978 crore in FY20. The company's losses remained stagnant as it only grew by 1.4% to Rs 2,482.3 during the fiscal year ending March 2021.

According to the email, Udaan has managed to improve unit economics by ~ 1,000 bps with efficiencies in both gross margins and operating costs. It further added that the company has reduced its burn by 60%. The company is also warming up to be IPO-ready in the next 12-18 months, wrote Pandey in the email.

On the lines of many growth and late-stage companies, Udaan had also laid off 180 employees to cut costs and extend the runway. The cost-cutting measures were put in place because of the challenging funding environment. 

The six-year-old company provides procurement, logistics and working capital to small and medium merchants across India. It claims to have a network of over 3 million retailers, chemists, kirana shops with a supplier base of 30,000 sellers which covers 1200 cities and towns in India. Its direct and indirect competition includes Moglix, Zilingo, Jumbotail, OfBusiness, IndiaMart among others.