Home / Companies / Start-ups /  Snapdeal buys minority stake in PepperTap

New Delhi:, India’s second largest online marketplace, has bought a minority stake in Gurgaon-based hyperlocal grocery delivery firm PepperTap.

This is Snapdeal’s latest push into hyperlocal after the company launched Snapdeal Instant in August, a hyperlocal delivery service being piloted in Delhi, Mumbai and Bengaluru.

Snapdeal, run by Jasper Infotech Pvt. Ltd, led the $36 million investment round in PepperTap. New investors Russia’s Ru-net, Japanese private equity firm JAFCO and BeeNext, and existing investors Sequoia India and SAIF Partners also participated in the current round.

PepperTap, run by Nuvo Logistics Pvt. Ltd, is in advanced talks to raise an additional $20 million from a US-based investor, co-founder Navneet Singh said.

The deal is likely to be closed in the next few weeks.

PepperTap in April raised $10 million in Series A round from Sequoia and SAIF Partners. The company has raised about $11 million since the start.

The two companies did not disclose the financial details of the transaction on Tuesday.

“We don’t have to own every part of ecosystem... We can build it by partnering with companies and making strategic investments," said Kunal Bahl, co-founder and chief executive of Snapdeal.

According to Bahl, grocery contributes 59% of India’s retail GDP and is an important part of Snapdeal’s strategy to take consumption online.

“We are excited to be entering into a strategic partnership with PepperTap. We look forward to working closely with PepperTap to make them very successful, leveraging the capabilities we have built in Snapdeal’s ecosystem," Bahl added.

The two companies are in discussions to offer PepperTap’s assortment to Snapdeal and FreeCharge customers. PepperTap will also use the FreeCharge wallet as its preferred wallet.

“PepperTap has been on a hyper-growth track since its inception nine months ago. From less than $1 million GMV (gross merchandise value, or the cost of goods sold) run rate at the start of fiscal year 2015-16, we are solidly on track to end the year with a GMV run rate of over $250 million," said Singh.

PepperTap, which was founded by Singh and Milind Sharma in November 2014, will use the money towards expansion in 75 cities in the next six months and towards customer acquisition. The company is also planning to double its staff to 5,000 employees in the next six months. It currently has a staff of 2,500-plus people.

The company currently has operations in 18 cities and does close to 15,000-17,000 orders a day.

Mint reported in September that large e-commerce firms Flipkart, Snapdeal and Paytm are preparing for an entry into hyperlocal delivery and are considering investments in such start-ups.

Over the past nine months, investors have pumped in hundreds of crores of rupees into hyperlocal groceries and food start-ups such as Grofers (Locodel Solutions Pvt. Ltd), PepperTap, TinyOwl (TinyOwl Technology Pvt. Ltd) and Swiggy (Bundl Technologies Pvt. Ltd), betting that some of these nascent companies can become as valuable as Flipkart and Snapdeal, which are valued at $15 billion and $4.5 billion, respectively.

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