Hyper local delivery startup, Grofers is in talks to raise $100 million led by SoftBank at a valuation of between $300 million and $400 million. The company has raised $45 million funding so far. In April, it closed $35 million in series B round led by existing investor Tiger Global Management with participation from early backer Sequoia Capital India. And, in February, the firm had secured $10 million in Series A round.
As per sources familiar with the matter, Grofers has also held talks with Russian billionaire Yuri Milner’s DST Global, but SoftBank is now in talks to lead the round. The company will use the new funding to boost their growth strategy to compete against players like Flipkart, Snapdeal, Amazon and Paytm in the hyperlocal delivery space.
“Grocery is an easy category to grow and the business has high repeat orders; ticket sizes are also high. And online retailers need to double their GMV in the next six months so they are looking to go after additional markets which can grow,” a venture capital investor privy to the talks told ET.
Competition in hyperlocal grocery service is growing at an explosive rate in India. Online retailers have also started piloting their hyperlocal grocery services. Two days back, Flipkart launched Nearby App for grocery delivery in select areas of Bangalore, such as Koramangala, HSR Layout, BTM Layout, Ejipura, Jayanagar, JP Nagar, and Bellandur. In September 2015, Snapdeal led an investment of $36 million in Peppertap to grow its foothold in the grocery segment. Like Flipkart, Paytm too had announced its dedicated app for groceries, Paytm Zip. Amazon has been experimenting hyperlocal delivery with kirana stores.
As per a report on the Indian Internet market by IIFL, grocery accounts for over 70% of India’s total retail market of $350 billion, evidently enough a lot of players are trying to tap into this opportunity.