The online grocery market in India is heating up with ecommerce major Amazon entering the space last year
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Online grocery store Bigbasket.com has raised Rs 45 crore in venture debt financing from Trifecta Capital, said parent company SuperMarket Grocery Supplies Pvt Ltd, in a statement on Friday. The funds will be used to strengthen the Bengaluru-headquartered company’s cold chain as well as set up new warehouses.
The announcement comes at a time when the e-tailer has already mandated investment bank Morgan Stanley for a $150 million fund-raise. According to Vipul Parekh, CFO and co-founder of Bigbasket.com, while the company has access to equity capital, it was looking to optimise its capital structure and hence sought this form of debt financing. “Venture debt is much cheaper than equity, especially on a post-tax basis and will help reduce our overall cost of capital,” he said. “It also comes without any end-use restrictions.”
Venture debt providers generally lend anywhere between Rs 5 crore and Rs 50 crore at an interest rate of 15-17 percent, over a 2-3 year horizon. This form of financing is usually available to startups and SMEs that have already raised equity financing, but lack the assets or cash flow to obtain traditional debt financing.
“We have a clearly identified use case for debt. We are present in 25 cities and continue to optimise our supply chain. A significant part of our business is fresh fruits and vegetables, the bulk of which is sourced directly from farms. It is crucial that we maintain the quality right up to the last mile,” said Hari Menon, CEO and co-founder, Bigbasket.com. The company has thus far raised around $220 million in equity financing from marquee investors like the Abraaj Group, Bessemer Venture Partners, the World Bank’s International Finance Corp and Helion Venture Partners, among others.
The online grocery market in India is heating up with ecommerce major Amazon entering the space last year with its Amazon Now offering, as well as announcing its plans to invest $500 million in offline food retail stores in the country. Earlier this month, Bigbasket.com and rival Grofers also submitted FDI proposals to the government for retailing food products through brick and mortar stores. Currently, Bigbasket.com stocks over 18,000 products and 1,000 brands and claims to fulfil about 50,000 orders a day.
“Unlike other online grocery businesses, they [Bigbasket.com] are a full stack player and have already broken even in some of the key markets like Bengaluru and Hyderabad. Besides, they are backed by very high quality and deep pocketed investors. We are excited to be a part of their growth story,” said Nilesh Kothari, co-founder, Trifecta Capital. Founded in 2014, along with former Canaan Partners executive Rahul Khanna, the Gurugram-based venture debt firm has a corpus of Rs 500 crore, and has invested in 18 companies so far, including beverage company PaperBoat, logistics startup Rivigo, online furniture store Urban Ladder and on-demand home services company Urban Clap, among others.