Reports suggest that Grofers may raise funds at a valuation lower than its 2015 valuation of Rs 400 crore.

Grofers in talks with SoftBank and Tencent to raise funds after turnaround
Atom Fund Raising Wednesday, January 24, 2018 - 09:35

Online grocery business appears to be next big bet for both the top players in the field and those involved in funding them. After a forgettable few quarters before regaining its feet and Grofers is aggressively competing BigBasket, at least if one went by GMV.

Riding on the back of this turnaround, Grofers is now in talks to raise fresh funds from its existing investor SoftBank. The startup is also in talks with Tencent, the Chinese investment major.

The more critical aspect to be pointed out is that Grofers is looking at a lower valuation than its 2015 valuation of Rs 400 crore. The valuation may have to be scaled down by a good 20% to 30%. The funding of this nature is termed down round in the trade. Interestingly Grofers was also trying to get Amazon to invest in it some time ago.

This also comes after there were talks of a possible merger with rival BigBasket but the deal did not materialize. It is also known to most people that there were serious attempts made for a takeover of Grofers by Flipkart, largely because of the investors in both the firms, namely SoftBank and Tiger Global, being common to both firms.

Grofers initially tried out the express delivery format, which it eventually realized wasn’t viable for it in the overall scheme of things and has now adopted a hybrid model. The express or ‘on demand’ delivery format turns out to be quite expensive and sucks a lot of cash out of the system.

Grofers India last raised funds towards the end of 2017 when its Singapore-based parent company Grofers International pumped in $14.7 million

 Of the $400 billion grocery and foods market in India, hardly 5% comes from the organized retail sector. The contribution from online grocery, which is still in nascent stages, may be negligible, though the reported figure of $300 million achieved by them seems impressive. 

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