India’s largest online grocery firm BigBasket is raising whopping USD$280 million in Series-E round led by Paytm Mall and China’s Alibaba Group. As a result, BigBasket’s ‘post funding’ valuation will now range between $800-900 million, making the company in close range of ‘unicorn’ startups.
While existing investors Sands Capital and The Abraaj Group are putting in $80 million, the remaining $200 million is coming from new investors Paytm Mall and Alibaba Group. About $50 million of the overall $200 million investment by Paytm Mall and Alibaba could be used for buying out shares in BigBasket from existing investors. As per the report, the deal has been signed off by all the parties and a formal announcement is just around the corner.
Unlike to previous speculations that Amazon might invest hugely in Bigbasket, the e-grocer has chosen Paytm-Alibaba instead.
BigBasket, which was valued at $450 million during its previous fundraising led by Dubai-based The Abraaj Group, was in discussions with Amazon for an investment but the talks reached a stalemate over various issues, including valuation.
The grocery market in India is still very scattered and very small percentage of this is organised which is why it creates lot of opportunities for e-grocer companies. In India, apart from Bigbasket e-grocery is mainly led by SoftBank-backed Grofers, ZopNow and smaller players like Amazon Now and Satvacart. And they are all ready to battle it out to get a piece of a market, which will be valued at whopping $1.2 trillion by 2020.
As for online retail, grocery accounts for a mere 4% share, show data from consulting firm Praxis Global Alliance.
Founded in 2011, Bigbasket claims to have 5 million customers and has registered about Rs 1,400 crore in revenue in fiscal year 2017.
Flipkart too has fallen for grocery lucrativeness as couple of months back the e-commerce giant had already announced that the company was considering selling groceries again.
In April, we shared how Flipkart CEO Kalyan Krishnamurthy at the TiE event in New Delhi revealed his company’s plans of entering the grocery market in India. He had said, “Yes we will get into grocery… 80 per cent of units bought in India is grocery… $400-600 million is grocery market, so we have to get into it.”
As of now, its now a three-way battle — Amazon, which will now ride solo; Flipkart, which after failing earlier getting it restarted into grocery again; and BigBasket-Paytm-Alibaba combine.
Paytm and Alibaba’s investment in BigBasket will give it enough ammunition to defend its turf, while the combine will gain an entry into the fastest-growing online retail segment.