B2B unicorn Udaan raises Rs 300 crore debt funding from leading investors

Bengaluru-based B2B e-commerce platform Udaan has raised approximately Rs 300 crore in debt funding from major investors, including Lighthouse Canton, Stride Ventures, InnoVen Capital, and Trifecta Capital.

This funding round marks Udaan’s first debt financing of the financial year, positioning the company to strengthen its balance sheet and execute strategic growth initiatives.

The unicorn startup, which focuses on empowering small businesses in India, intends to use this capital to consolidate its market presence amidst the evolving e-commerce landscape.

Expanding market reach

The new funds will allow Udaan to extend its geographical footprint through a “Micro-Market strategy.”

The startup plans to target smaller regional markets, which will enable it to grow its network of small and medium-sized businesses (SMBs) across India. Udaan’s broad reach already spans multiple categories, such as FMCG, staples, electronics, home goods, pharma, and general merchandise, with over 3 million retailers in 900 cities.

It aims to leverage this strategic approach to enhance customer access and drive adoption among small retailers and Kirana stores across the country.

Operational improvements and cost efficiency

Udaan has prioritized optimizing its operations to improve efficiency and reduce costs. The funding will support the company’s investment in enhancing its Go-to-Market (GTM) capabilities, refining supply chain processes, and expanding its network of micro-fulfilment centers (MFCs).

The goal is to streamline delivery and strengthen customer service, which are critical to maintaining operational excellence.

Additionally, Udaan’s efforts to improve profitability are visible in its reported 30% reduction in EBITDA burn, showcasing significant progress towards achieving sustainable growth.

Path to profitability and financial performance

With profitability as a primary objective, Udaan has also shown notable financial improvements.

In 2024, the company reported a 60% increase in revenue and over a 50% rise in daily transacting buyers, contributing to deeper market penetration and higher wallet share among existing customers.

While gross revenue saw a decline from Rs 9,900 crore in FY22 to Rs 5,629 crore in FY23, Udaan managed to cut its losses by 33.7% in the same period, narrowing losses to Rs 2,076 crore in FY23.

The company has also reported a 200-basis-point improvement in gross margins and a 300-basis-point rise in contribution margins year-to-date.

Ankit Agrawal, Executive Director of Lighthouse Canton, remarked, “We are excited to partner with Udaan as they continue to transform the B2B landscape in India and maintain category leadership. This funding round underscores our confidence in Udaan’s strategic direction and its ability to drive sustainable growth for small businesses across India.”

"The latest round of debt funding highlights investor confidence in Udaan’s business model and the significant potential of the Indian eB2B market. It’s an endorsement of the consistent quarter-on-quarter growth achieved over the past ten quarters through various ‘customer-first’ initiatives,” said Kiran Thadimarri, senior vice president, group finance, Udaan.

“This funding will further strengthen our financial position, enabling us to double down on key strategic initiatives, such as expanding our cluster model to drive operational excellence, and to continue on our path to profitability while solidifying our market position."