Mumbai: Bengaluru-based chat messaging start-up Hatchery Software Pvt. Ltd, which operates by the name of Lookup.to, said on Wednesday that it has raised $2.5 million in a Series A (first) round of funding.

The round was led by Khosla Impact, a venture capital (VC) fund founded by Vinod Khosla, founder of Sun Microsystems Inc., with participation of Twitter Inc. co-founder Biz Stone, Catamaran Ventures, backed by Narayana Murthy of Infosys Ltd, and Global Founders Capital, among others.

It raised a seed (early stage) round of $382,000 in January.

Lookup.to, founded in November 2014 by Deepak Ravindran, is looking to use the funds for increasing its current merchant base of 70,000, hiring technology teams and expanding to 10 new cities by the end of this year.

Currently, it operates in Mumbai, Delhi, Bengaluru and Pune and is looking to expand to Dubai.

“Disruptive product start-ups are being built in India now. Khosla Impact funded Lookup to connect 40 million small businesses to consumers," said Khosla in a statement.

The local commerce industry in India is estimated to be $750 billion with the highest shop density in the world at over 45 million local businesses, according to data by the company.

Indian start-ups in chat- and messaging-based businesses have been getting investor attention. Earlier this year, Coraza Technologies Pvt. Ltd (Helpchat) raised 100 crore in a round led by Sequoia while Haptik Inc. raised $1 million in 2014.

Lookup.to allows users to chat with local businesses by providing details on availability of a product or any information, service or support. “The focus is to grow the hyperlocal offline network of merchants to 250,000 with a focus on all Indian cities," said Ravindran on the phone.

The company also launched its feature of allowing bookings for local saloons and spas this year. “Once we start seeing transactions flowing in, we will charge a commission, but this will be only after we achieve a certain level of scale," he added.

Lookup aims to reach out to 3 million users by December.

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