Grofers in talks to raise up to $65 mn from existing investors
BENGALURU: Online grocer Grofers is in talks to raise $60-65 million from existing investors in a funding round that could see the valuation of the Gurugrambased start-up drop by over 40%, two people close to the development said.
The round is being led by existing investor Japan’s Softbank Group with participation from Tiger Global Management, the people cited above said. Early investor Sequoia Capital is not likely to participate in the current round, said the two people on condition of anonymity.
Grofers, run by Grofers India Pvt. Ltd, last raised $120 million at a valuation of about $400 million in November 2015.
Softbank declined to comment. Grofers did not respond to Mint’s email queries.
If the round is finalised, it will dispel doubts about whether Grofers can survive, at least for the next year or so. Over the past year, Grofers has explored sale talks with bigger rival Bigbasket as well as Paytm, a third person familiar with the matter said.
Neither of the proposed deals materialised. On the business side, Grofers shut operations in several cities, changed its business model and put its focus on winning in Delhi-ncr by investing in improving its supply chain and technology.
The proposed fund raise by Grofers will give the company much-needed capital to try and sustain its fledgling turnaround and avoid the fate that many of its rivals met over the past 18 months. Despite an investment rush into hyperlocal start-ups in early 2015, many of these companies failed to expand significantly and prove that they could build sustainable businesses. Some such as Peppertap and Grocshop shut shop due to paucity of capital in a sector that offers wafer-thin margins.
Of late, the online grocery sector has become intensely competitive again with e-commerce firms such as Amazon and Flipkart expanding their grocery businesses. Big Basket, the largest e-grocer in the country, has also built a war chest to fight competition.