In a momentous business decision, Japan’s SoftBank Group along with Tiger Global Management have led a 400 crore funding for the Gurugram based online grocery store, Grofers, as reported by The Times of India. This would lead to a rise in its shareholding in the four-year-old company by 35-40%.
Along with SoftBank and Tiger Global, the fund-raiser is also shared by Russian tech billionaire, Yuri Milner.
The rise in SoftBank’s share would mean that the Grofers was looking for a funding in a down round and that it was devalued by 40%. A down round is when a company raises capital at a lower valuation compared to its previous fund-raiser.
While SoftBank Group invested $40 million, Tiger Global — which holds around 25% in the e-grocer — invested $15 million; the rest came from Milner. Sequoia Capital, the first institutional investor in Grofers was not a party to the latest funding.
Post the $120 million funding that Grofers received way back in 2015, this is the first round of fundraising and Grofers value has reduced to almost 20% i.e. $300 million.
Speaking to The Times of India, Grofers co-founder, and CEO, Albinder Dhindsa said,
“The business is in a much healthier place and almost 10 times the size it was in November 2015 when we last raised capital. We took a lot of hard decisions to fix parts of the business that were not scaling well and our efforts have clearly contributed in making sure we have a clear path to profitability as well as the largest market share in the online grocery segment.”
After battling a rough phase, Grofers has started reaping profits on a per-order basis in Delhi.
Online grocery market was largely dominated by companies like BigBasket till 2015-16 but is now an open battle between Alibaba, Amazon, and Flipkart, which is close to bringing in Walmart as its majority shareholder.
Recently, China’s Alibaba picked up a substantial stake in Big Basket, with a $300 million investment, a mix of primary and secondary capital.
Dhindsa claimed that Grofers intends to remain independent as of now – a possible merger with Big Basket did not work out last year.The priority lies in growing in their target group while ensuring that they are moving more markets towards profitability.
“If horizontal players saw that their core markets were providing enough value they would not be looking at expanding into a special category with operational complexity. A player like Amazon still doesn’t have a coherent grocery strategy in the US market where they have been operating for almost 25 years,”