Microsoft backs Udaan in the $275 million capital raise fund

Tech giant Microsoft has invested in the B2B e-commerce unicorn Udaan in an ongoing $275 million debt financing round through convertible notes. An Udaan spokesperson confirmed to Business Today of Microsoft's participation in the fund raise. Through convertible notes, the instrument can be converted into equity at the time of public listing of a company.

Sources privy to the developments said that Udaans valuation was nearly $3.5 billion during the debt financing round. The company, however, did not disclose any official valuation figure. Notably, this is also the second IPO-headed start-up which Microsoft has backed. Last year, the US tech firm invested $5 million in hospitality unicorn OYO which valued the company at $9.6 billion. OYO is likely to list on the stock exchanges this year.

Udaan, meanwhile, is expected to list on domestic stock exchanges by next year. The e-commerce marketplace joins the likes of global start-ups like Airbnb, Uber and Spotify which raised capital through debt financing before an IPO.

Last year, Udaan also raised a $280 million fund raise in a Series D round led by Octahedron Capital and Moonstone Capital with participation from existing investors Lightspeed Venture Partners, DST Global, GGV Capital, Altimeter Capital and Tencent.

The company was valued at $3.1 billion.

BT earlier reported that Udaan also started a pilot project for its community grocery delivery initiative in 1,000 cities and plans to expand to 1,500 cities. The start-up has also set its target of 1 million transactions by the next month. The business model, as per sources, is on the lines of China's big e-commerce start-up, Pinduoduo that filled the vacuum of community-level shopping in China's Internet commerce industry through group purchases.

"Under the pilot project, the local retailer or kirana takes bulk orders from the neighbourhoods or societies on Price Company app and then Udaan delivers the groceries in next 24 hours," a source said.

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