Indian online grocery startup Grofers is reportedly in the final stages of raising USD 55 – 60 million in the latest financing round led by SoftBank with participation from incumbent investors, local newspaper The Economic Times (ET) reported citing sources in the know.
Half of the amount, or around 30 million dollars, will be coming from SoftBank’s Vision Fund while the remainder from other investors including Tiger Global and South Korean VC firm KTB Ventures.
Valuation for the company post the round will remain in line with the USD 650 – 700 million after its last Series F round, also led by SoftBank.
SoftBank has made several rounds into the Gurugram-based startup since 2018 as part of its bet on the burgeoning startup ecosystem in the world’s second-most-populous country.
Online grocery delivery, a hotly contested and rapidly growing niche in the country’s e-commerce sector has invited all sorts of players to the fray. Grofers is competing against well-funded heavyweights such as Reliance Retail, Amazon, Walmart’s Flipkart, as well as independent players such as BigBasket which was rumored to receive funding from the Tata Group.
BigBasket and Grofers grabbed more than 80% of the e-grocery market in 2018, according to a report by investment bank Goldman Sachs.
India had a two-month-long national lockdown earlier this year to combat the spread of covid-19, during the period demand for online food and grocery delivery spiked. And the growth sustained even after the country gradually relaxed the quarantine across states to re-open its economy.
That said, the pandemic still dealt a blow to many startups. Grofers is among a bevy of startups that had to either cut jobs or slash salaries or do both to extend their runways.
Grofers has had a bumpy ride since its inception in 2014. Two years later in 2016, the company had to lay off around one-tenth of its total workforce and shutter operations in various cities to put a lid on its cost.
In 2018, the company pivoted its business model to a private label company that targets the mass market with needs to stock up daily necessities, banking on affordably-priced in-house products to turn around its business. It has worked well for the company until the pandemic hit and unleashed Indian consumers’ online consumption power that gives the likes of Grofers another push to further grow.