Gurgaon headquartered online grocery startup Grofers is in talks to raise $60-65 million from existing investors Softbank and Tiger Global. The possible funding round could see the valuation of the Grofers drop by over 40%, reported LiveMint, citing two people aware of the development.

Grofers' early investor Sequoia Capital is not likely to participate in the upcoming round, said the report.

The startup last raised $120 million from Softbank at a valuation of about $400 million in November 2015. Prior to that it had raised $10 million from Tiger Global.

Grofers had earlier reported a whopping loss of Rs 225 crore and a revenue of Rs 14.3 crore in FY-2016 while its biggest competitor BigBasket, operated by Bengaluru-based SuperMarket Grocery Supplies Pvt Ltd. BigBasket’s revenue for same financial year had tripled to Rs 563 crore.

If the said upcoming funding round happen then too it will raise doubts about whether Grofers can survive, at least for the next year or so.

Moreover, in last one year, Grofers has explored sale talks with bigger rival BigBasket as well as Paytm, said the Live Mint report, citing a third person familiar with the matter.

Nevertheless, the proposed funding round, if happens, will give funds hungry Grofers enough money to sustain atleast for couple of years. It is to be noted that since 2016, Grofers had shut its operations in several cities, changed its business model from hyperlocal to inventory-based and had put its focus on winning in Delhi-NCR area where it is headquartered in.

According to market intelligence provider Kalagato, BigBasket held about 35% market share in online groceries, closely followed by Grofers and Amazon at 31.5% and 31.2%, respectively by March 2017.

After experiencing a hard time in 2015-2016, the online grocery market in India was reported to be only $1 billion in sales in 2017. Many hyperlocal grocery delivery startup couldn't sustain the crunch occured since 2015 and then follows a chain-reaction where startups shut down their operations one by one, starting with Sequoia backed Peppertap and then GrocShop, LocalBanya, AskMeBazaar, Lazylad and Genie, among others, also shut down.

Notably, Grofers' biggest rival Bigbasket has recently raised $300 million from Alibaba.

Last November, it was reported that Reliance Jio, a wholly owned subsidiary of India’s biggest business conglomerate Reliance Industries, is also planning to make entry into India’s online grocery market.

Prior to that, Adani Wilmar, the company that markets ‘Fortune’ brand of food products in India, also announced its plans to enter the online grocery sales business with a new e-commerce portal and app called ‘Fortune Online’.

Flipkart too has launched its grocery delivery app called Supermart, as a pilot in Bengaluru, in November 2017.

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