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Indian e-commerce startup Udaan, backed by Lightspeed Venture Partners and Tencent Holdings (OTC:) Ltd., is planning for its initial public offering (IPO) in 2025. The company is currently strategizing to cut costs and form partnerships with consumer brands as part of its preparation for the IPO. The firm, which competes with industry giants such as Reliance Industries and Walmart (NYSE:)’s Flipkart, is also aiming for operational profitability within the next 18 months, according to CEO Vaibhav Gupta.
In response to investor demands for profitability, Udaan has reduced its workforce to about 1,800 employees and strengthened its internal controls. The company’s co-founders, Amod Malviya, Sujeet Kumar, and Gupta, are former Flipkart engineers who have developed an online marketplace that facilitates faster deliveries for small stores by eliminating traditional middlemen.
Udaan’s digital-led wholesale business could potentially yield a 100% return on capital invested and generate $150 billion in sales over the next decade, according to estimates from McKinsey & Co. In addition to its core e-commerce operations, Udaan has also ventured into financing through its profitable fintech unit. This unit provides working capital loans to shopkeepers and is growing at a rate of 70% annually.
The company was valued at over $3 billion in 2021, with Lightspeed owning a 35% stake and Tencent holding a 6% stake. Currently, Udaan is in talks to raise $400 million in funding as part of its strategy to achieve financial stability and maintain market share in India’s rapidly expanding economy. As part of its IPO preparations, the company is considering listing either in India or overseas.
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