Grofers in early talks to raise $120 million in fresh capital

New Delhi: Gurgaon-based hyper-local delivery start-up Grofers, run by Locodel Solutions Pvt. Ltd, is in early talks to raise $120 million in fresh capital largely from Japan’s SoftBank Corp. and Russian entrepreneur and venture capitalist Yuri Milner, according to two people aware of the development.

Existing investors Tiger Global Management and Sequoia Capital are expected to participate too. The deal is likely to value the company slightly below $400 million, according to the two people mentioned above who spoke on condition of anonymity.

The new round of fundraising comes within six months of Grofers raising $35 million from existing investors Tiger Global Management and Sequoia Capital. In February, both Tiger and Sequoia invested $10 million in the company.

The Economic Times first reported the news of the latest fund raise on Wednesday morning.

Before SoftBank, Grofers was also in talks with India’s largest e-commerce marketplace Flipkart for a potential strategic investment. However, the deal did not materialize, according to the two people cited above.

Softbank is expected to take 20-30% stake in the company, according to one of the people cited above.

Grofers declined to comment on the news, SoftBank did not immediately respond to Mint’s email queries.

In July, SoftBank announced that the firm will shut down its venture capital (VC) arm and avoid investing in early-stage firms, Re/code, the popular US technology news website reported citing Nikesh Arora (Softbank’s president), who said the “large-check marketplace” was less crowded.

In October 2014, SoftBank pledged to invest a total of $10 billion over a decade in the country. It is currently an investor in India’s largest cab hailing service Ola and second largest e-commerce marketplace Snapdeal.

Grofers currently delivers in 25 cities and gets about 30,000 orders in a day. The company lists all neighbourhood stores on its platform (from grocery shops to pharmacies), and employs a delivery crew of 4,000 people that is growing rapidly.

Gurgaon-based Grofers was founded in 2013 by Saurabh Kumar and Albinder Dhindsa.

Globally, hyper-local delivery companies are attracting serious investor interest.

US-based Instacart was valued at $2 billion in January when the company received $220 million from Kleiner Perkins Caufield & Byers, Comcast Ventures, Dragoneer Investment Group, Thrive Capital and Valiant Capital among others.

Sequoia invested in US-based DoorDash, an on-demand food delivery start-up.

Grofers competes with other food and grocery delivery start-ups such as PepperTap (Nuvo Logistics Pvt. Ltd), TinyOwl (TinyOwl Technology Pvt. Ltd) and Swiggy (Bundl Technologies Pvt. Ltd) that connect customers with supermarkets and restaurants through apps and deliver products on-demand—in a few hours or even quicker.