Microsoft Backs Udaan in $250M Debt Funding

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Tech giant Microsoft has invested in B2B e-commerce unicorn Udaan in a $275 million debt financing round through convertible notes. A Udaan spokesperson confirmed to Business Today Microsoft’s participation in the fundraiser. Through convertible notes, the instrument can be converted into shares at the time of a company’s IPO.

Sources familiar with the developments said Udaans’ valuation was nearly $3.5 billion in the debt financing round. The company, however, did not release any official valuation numbers. Notably, it is also the second IPO-led startup that Microsoft has backed. Last year, the American tech company invested $5 million in unicorn hotel business OYO, which valued the company at $9.6 billion. OYO is expected to go public this year.

Udaan, meanwhile, is expected to be listed on national stock exchanges by next year. The e-commerce market joins global start-ups like Airbnb, Uber and Spotify that raised capital through debt financing ahead of an IPO.

Last year, Udaan also raised $280 million in a Series D funding 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 reported earlier that Udaan has also started a pilot project for its community grocery delivery initiative in 1,000 cities and plans to expand to 1,500 cities. The startup has also set its goal of 1 million transactions by next month. The business model, the sources said, is inspired by major Chinese e-commerce start-up, Pinduoduo, which filled the community-level purchasing void in China’s e-commerce industry through group purchasing.

“Under the pilot, the local retailer or kirana takes bulk orders from neighborhoods or companies on the Price Company app, and then Udaan delivers groceries within the next 24 hours,” a source said.

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