Softbank To Lead Grofers’ $80 Million Funding Round
Grofers to raise little less than $80 million at 11 percent lower valuation.
Online grocery startup, Grofers India Pvt. is in the final stages of raising $75-80 million in a round led by its existing investor, Japan’s Softbank Group Corp., said two people privy to the development.
Grofers will be valued at around $310 million, roughly 11 percent less than its last round, one of the people quoted above said requesting anonymity, as the talks are private. The Gurugram-based startup had raised $120 million in 2015 at a valuation of $350 million.
Existing investors including Tiger Global and Yuri Milner’s personal investment vehicle, Apoletto, will also participate in the fresh round, the person added. Softbank alone is looking to pump in $60-65 million in this round, the second person said, adding that Sequoia will skip this round. The deal is likely to close in another two weeks.
Grofers, Tiger Global, and Apoletto did not respond to emails seeking comment on the new funding. “We never comment on speculation,” Softbank said in an emailed response.
Earlier this week, Livemint had also reported that Grofers is raising $65 million at a 40 percent lower valuation.
Grocery Opportunity
The fresh investment by Masayoshi Son-led Softbank into Grofers signals the growing competition in India’s grocery space, which recently saw Alibaba Group Holding Ltd. putting in $300 million in Grofers' biggest rival BigBasket. Grofers also faces competition from homegrown e-commerce platform Flipkart Ltd. and from the world’s largest e-commerce company Amazon.com Inc., both of which are also looking to expand their grocery play aggressively.
The online grocery business is set to be the fastest-growing e-tail segment in India, expanding at a compounded annual growth rate of over 65-70 percent between financial years 2016-17 and 2019-20, rating agency Crisil said in a report. Grocery-related ventures’ revenue is expected to almost quadruple to Rs 10,000 crore over the next three years, Crisil estimates.
The proposed funding will give Grofers much-needed ammunition to strengthen its business. In India, over the past couple of year several of the high-profile grocery startups, like PepperTap and LocalBanya-have downed their shutters.
Grofers, which started operations in 2013, too has had its share of learning. The firm which sells everything from vegetables to kitchen mops transitioned from a hyperlocal model to an inventory-led model two years ago.