MUMBAI: Rural e-commerce platform Rozana has raised ₹290 crore in a Series B funding round led by Bertelsmann India Investments, as the company looks to deepen its presence and expand its rural storefront network, Ankur Dahiya, co-founder and chief executive told Mint.
“We started in Uttar Pradesh and Haryana and we feel its the right time to expand our footprint in the same Ganges belt,” said Dahiya. “Secondly, we want to increase our penetration in the areas we're present.”
The fundraise comes as Rozana scales its hybrid rural commerce model—combining neighbourhood storefronts and centralized warehouses with a network of women-led last-mile partners—at a time when relatively few startups are focused exclusively on India’s rural e-commerce opportunity.
The fundraise was led by German conglomerate Bertelsmann's local venture capital arm, Bertelsmann India Investments (BII) with participation from Fireside Ventures, US-based Spark Growth Ventures, FE Securities and a few family offices.
The deal was majorly a primary investment with a small component of secondaries to give early angel investors an exit. This is the second time BII has led the company's fundraise, the first one being in 2024, when the firm led Rozana's $22.5 million Series A round.
Sparse competition
It's worth pointing out there are not many rural-focused e-commerce startups. Data from Tracxn shows that there are only 82 companies in the segment.
These include B2B players like Prosus and Softbank-backed unicorn ElasticRun as well as ShopKirana, which was acquired by Udaan in July last year.
Of these, 16 have been deadpooled, i.e., shutdown, 43 remain unfunded, 8 remain at the seed stage, just three have reached a Series B round, while 8 are at Series A, and two have been acquired. ElasticRun is the only company to have reached a Series E, and the only company to be valued at or more than $1 billion.
Hybrid model
Rozana, on the other hand, focuses on a B2C model, and a hybrid of technology and boots on the ground through ‘Saarthis,' women who act as last-mile fulfillment partners through a gig economy model, delivering product from their stores to villages.
The company currently has a presence across 17 districts in UP and Haryana across 86 stores, similar to dark stores. For context, UP has 75 districts, while Haryana has 20. Rozana serves more than 22,000 villages across the two states through the help of of its 36,000 Sarthis, of whom 80% are women.
The money is being directed to add to the number of storefronts it has live.
Dahiya said their goal at the moment was to increase the number of stores Rozana has across the two states, with in-roads into districts varying depending on size.
“By the next financial year we want to have 200 stores live. I want to open them and work with them responsibly.”
Category expansion
The other part of Rozana's expansion is adding more categories of products to the platform. While the startup initially started with food and fast moving consumer goods to meet basic household requirements, it saw high demand for other categories of products.
Now, the company is adding categories like shoes, apparel, children's toys, home and kitchen utility, to name a few.
Already, these categories are available in 50% of the company's stores, with the other 50% left to go.
“Fashion is our fastest growing category,” said Dahiya. “Home and kitchen as well as toys are also equally big categories.”
Aspirational demand
The company expects that cosmetics and hardware will end up being breakout categories, primarily because many of these products are aspirational.
While the launch cosmetics has been limited to a small area, the company is seeing good traction.
“Incomes have increased, direct benefit transfers have become more efficient. Remittances from family working in tier one cities or abroad have also increased,” Dahiya said.
“All these things growing means category expansion for us.”