BigBasket raises $200 million from Tata Digital, others; valuation hits $3.2 billion
BigBasket has raised $200 million in new funding that has boosted the valuation of the Tata Digital-owned e-grocer to $3.2 billion, a top executive Said. In addition to Tata Digital, which owns 64% in the Bengaluru-based company, other investors in the firm have also participated in the funding round. The company’s valuation has now increased by 60% compared to the last primary cash infusion. Mirae Asset, UK’s CDC are among other investors in BigBasket parent Supermarket Grocery Supplies.
Cofounder and CEO Hari Menon said the fresh capital will be used to strengthen infrastructure and ramp up marketing for expansion of the core grocery business. It will also invest further in its quick commerce product BB Now, having entered the space relatively late. The e-grocer was looking to raise $200 million and would be valued in the range of $3-3.5 billion, post-money. In a secondary share sale in March, it was valued at $2.7 billion.
Menon pointed out that quick commerce can’t be a standalone business for a grocery firm as it’s a ‘tricky business’ to “make money in due to its lower average order value”. At BB Now, the average order value is about Rs 460 similar to the industry average. In the past year, the quick commerce space had seen a funding frenzy that has tapered amid an industry wide slowdown in startup funding.
BigBasket plans to take the main e-grocery business to about 75 cities, up from the current count of 55 cities. It plans to also move other services like the subscription-based BB Daily onto its main app, along with Tata Digital’s epharmacy offering 1mg.
These changes and the expansion will begin in the new year.
Menon said the standalone core grocery business is expected to hit operating profitability by the third quarter of next financial year. It is estimated to close the ongoing financial year with gross sales of $1.5 billion with a target to reach about $2 billion in gross sales in the next year.
The Bengaluru-based firm’s latest funding also comes when there is a serious slowdown in late-stage funding. In September, a Tata Digital-led funding round had raised the valuation of the group’s epharmacy portal 1mg to over $ 1 billion, turning it into a unicorn.
Cofounder and CEO Hari Menon said the fresh capital will be used to strengthen infrastructure and ramp up marketing for expansion of the core grocery business. It will also invest further in its quick commerce product BB Now, having entered the space relatively late. The e-grocer was looking to raise $200 million and would be valued in the range of $3-3.5 billion, post-money. In a secondary share sale in March, it was valued at $2.7 billion.
Menon pointed out that quick commerce can’t be a standalone business for a grocery firm as it’s a ‘tricky business’ to “make money in due to its lower average order value”. At BB Now, the average order value is about Rs 460 similar to the industry average. In the past year, the quick commerce space had seen a funding frenzy that has tapered amid an industry wide slowdown in startup funding.
BigBasket plans to take the main e-grocery business to about 75 cities, up from the current count of 55 cities. It plans to also move other services like the subscription-based BB Daily onto its main app, along with Tata Digital’s epharmacy offering 1mg.
These changes and the expansion will begin in the new year.
Menon said the standalone core grocery business is expected to hit operating profitability by the third quarter of next financial year. It is estimated to close the ongoing financial year with gross sales of $1.5 billion with a target to reach about $2 billion in gross sales in the next year.
The Bengaluru-based firm’s latest funding also comes when there is a serious slowdown in late-stage funding. In September, a Tata Digital-led funding round had raised the valuation of the group’s epharmacy portal 1mg to over $ 1 billion, turning it into a unicorn.
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