B2B e-commerce unicorn, Udaan has received debt capital commitment from EvolutionX Debt Capital (EvolutionX). According to sources close to the development, the investment size will be around $35-$40 million.

This development comes on the heels of Udaan announcing its second round of layoffs this year, citing macroeconomic conditions. In the second round, almost 300-350 payrolled employees across functions and a number of contractual staff were impacted. Udaan also raised $120 million in convertible notes and debt from existing shareholders and bondholders in October.

Financial strength

EvolutionX’s investment, alongside Udaan’s recent capital raise, is expected to improve the company’s financial strength as well as continue to drive its operational efficiencies with an enhanced focus on achieving profitable growth.

Commenting on the investment, Rahul Shah, Partner and Co-Head leading investments across India and Southeast Asia for EvolutionX, said, “We continue to focus on our strategy of providing an alternative source of debt financing for technology companies to accelerate their growth and continue on their path to profitability. While venture debt has become a growing asset class in India, there is a clear gap in the growth debt space with EvolutionX emerging as a leading player to bridge this gap and has already committed approximately $85m (₹680 crore) in this quarter to category-leading technology companies led by promising founders and reputed investors. We believe that Udaan’s business model holds immense growth potential while keeping technological innovation at its forefront.”

Vaibhav Gupta, Co-founder & CEO, Udaan expressed delight in partnering with EvolutionX for this round of funding. He said, “The efficiency enhancement and structural cost-optimisation initiatives that we undertook last year have already started showing results. Post achieving the milestone of positive unit economics in the previous quarter, we have witnessed robust growth in business during the last two consecutive quarters. We will continue to invest in technology to further enhance customer experience and scale; build additional capabilities to tap the potential of the kirana eCommerce market; and deploy capital in areas that will drive our future growth and profitability. We are excited to join hands with Rahul and his team at EvolutionX as long-term partners on this growth journey to change and organise the massive $1 trillion+ trade market of the country.”

EvolutionX provides amortizing term debt facilities in the range of $20-50 million along with warrants or convertible instruments. The fund seeks to invest in technology companies in a wide array of sectors such as consumer, education, financial services, healthcare, logistics and industrial development in India, China and Southeast Asia. Headquartered in Singapore, EvolutionX has built an investment team in Singapore, as well as a team based in Mumbai in 2022, and intends to establish its presence in China in 2023.