Incepted in 2016 by Amod Malviya, Sujeet Kumar and Vaibhav Gupta, the organization turned into the quickest Unicorn in September this year in the wake of raising $225M driven by DST Global and Lightspeed Venture Partners. The financing round came as a sheer shock for media, examiner and the individuals who track B2B fragment as there is next to no detail public about the Bengaluru-based organization.
Udaan began operation as a logistic platform for buyers and sellers in staple (rice, lentils etc.), electronic and apparels. The idea was to understand the demand and supply aspects across the aforementioned categories. The company focused only on logistics part for about 8-10 months. Logistics essentially helped it to foster a relationship with the buying and selling community in the B2B space. For more than a year and a half, Udaan did logistics on subsidised rate and it helped them to gain significant exposure within the community. More importantly, logistics allows Udaan to gain insight on who is buying what. Essentially, the company’s deliberate goal was to build a database of buyer and sellers before getting into supply business.
They don’t intend to make money through logistics and commission at the moment. Udaan funds working capital for its buyers and charge around 15-18 percent interest on it.Financing working capital has been a major headache for end retailers. They typically end up borrowing from local lenders who charge exorbitantly. Udaan intends to be a working capital ‘fund’ for them. With the combination of a marketplace, logistics, and lending, it turns out that Udaan has been building full stack platform for SMEs. And if it executes well, there is big winning to take home. Since Udaan knows about the financial health of sellers through transaction history, understand the size of working capital requirements and has the ability to recover, it’s in perfect position to offer loans and collect them without much manpower involvement.