Post the fundraise, SoftBank will hold over 40% stake in Grofers through Softbank Vision Fund, with Tiger Global being the second largest shareholder.

Grofers in talks to raise fresh round of funding led by SoftBank
Atom Fund Raising Tuesday, October 30, 2018 - 07:36

Grocery delivery startup, Grofer is a reportedly set to receive a fresh funding to the extent of $120 to $150 million. The majority of these funds are likely to come from SoftBank, through SoftBank Vision Fund.

According to an Economic Times report, a fund with a corpus of $100 billion will move the earlier investment Softbank made in Grofers from its own balance sheet also to this entity. The other investors who will participate in this round will include Metro AG, the German retail group. Other existing investors, including Tiger Global, Russian billionaire Yuri Milner, and Sequoia Capital, are also likely to pick up small amounts.

SoftBank has been trying to convince Grofers to merge itself with rival BigBasket, where Alibaba has made investments, but this has not come through so far. What cannot, however, be overlooked is the fact that post this investment, if it goes through, SoftBank will end up being a majority stakeholder in Grofers with as much as 40%, followed by Tiger Global and the others. Metro AG has a foot in India with its cash & carry offline stores (27 stores) and reports indicate that they were keen to take a larger position within this investment round, but may end up bringing in around $30 million only.

ET report claims that the overall ticket size may even go up to $200 million with one more financial investor joining in. The talks are in the final rounds according to them and none of the entities have officially confirmed or denied any of these reports.

This is the second time in 2018 that Grofers would have raised funds, the first one being in the month of February, when it sought funds after redrawing of its business strategy. Grofers has limited operations with around 46,000 orders being received and executed on a daily basis. But its average order value of around Rs 1,600 is quite impressive. Very few online retailers can boast of such average order value.

But in the overall context of ecommerce, the challenge remains for even the giants like Amazon and Flipkart who also want to go aggressive in the foods/grocery/fresh articles space. It is reported that the investors like Alibaba and SoftBank are not overly optimistic in this segment if they went by the experience in some of the developed markets like the US.

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