Udaan: Reaching Unicorn Status by Solving Burning Social Issues
It took living in India with a personal burning issue to jumpstart one of the youngest-ever Unicorn status startups.
Founded in 2016 - Udaan reached $1 billion value in only 3 years.
By resolving a burning issue in transportation.
This B2B e-commerce platform quickly took the lead, but it hasn't all been milk and honey for them:
Educating people on how to go digital was the first obstacle.
Developing price standardization came next.
Their determination overcame every challenge along the way and it's why they're a continuous success story today!
Read the full story of Udaan - the platform that has 1 million active retailers - here:
Udaan is one of India's youngest Unicorn status startups. Founded in 2016, Udaan reached $1 billion in value in only 3 years.
By resolving the country's burning issue: trade problems for small, medium, and large businesses. Sujeet Kumar, Vaibhav Gupta, and Amod Malviya had a great idea, and its implementation propelled them to the world of international business.
Driven by philanthropy and quickly recognized by investors, this B2B e-Commerce platform quickly took the lead - but it hasn't been all milk and honey for them.
This is Udaan's story, and how wide social acceptance can skyrocket a startup!
The three Udaan co-founders are Indian startup heroes. Two things connect these three people: tech expertise and small-town origins.
Why is that important?
Sujeet, Vaibhav, and Amod are not exactly just anyone. They all have degrees from India's prestigious Institute of Technology and several years of experience working on top-notch positions in different companies.
Sujeet holds a Bachelor's degree in Civil Engineering, and right after university, he became Flipkart's President of Operations.
Vaibhav holds a Bachelor's degree in Computer Science and Engineering, as well as a Masters degree in Business Administration he acquired in Virginia. After finishing university, he worked as a consultant in Trilogy E-business Software India for a couple of years, transitioning into an engagement manager at McKinsey and Co. Before becoming one of Udaan's co-founders, he spent a couple of years as Flipkart's VP of products.
Amod is an electrical engineer, whose intelligence and high abilities had already shined during college: he earned the accolades ‘youngest Linux administrator', and ‘best secretary', among many others.
His experience in business counts many positions: he worked as a consultant in Associate system consultants in i2 Technologies, and then as a software engineer in Intellix Software. He was also Senior Software in Riya Internet Technologies India and VP of Engineering in Apna Paisa. Finally, before founding Udaan, he spent some time as Flipkart's CTO.
So, it's obvious that these guys met at Flipkart, which was also an e-Commerce business, that got acquired by Walmart.
Flipkart was a unique place to learn large-scale e-Commerce, but the team wanted to do more than just business: they wanted to prevent small businesses on India's periphery from collapsing.
India is an enormous country. To be more specific - it's the second-largest by the number of citizens and the seventh-largest by the size of its territory. One of the many problems huge countries are facing is transportation, especially the connections between small towns, villages, and larger cities. When the country is spread out on a huge geographical territory, it's not easy to create a good-enough transportation infrastructure.
That's why many small-town manufacturers and villagers have a hard time delivering their goods to bigger cities and business centres, and are forced to do business through middlemen and other third parties, making the trade fully untransparent. In addition, what often happens is that the middlemen disappear after receiving the villagers' goods, or they purchase them at unfairly low prices. That's how so many small and medium businesses from India's small towns and villages were left to the mercy or disfavor of middlemen, which often ended tragically.
The three co-founders were very familiar with this problem, and after spending years in Flipkart, and gaining knowledge and experience in the field, they decided to resolve this issue once and for all.
The first investments came before they even got their heads around Udaan's idea. Investors recognized the potential of this project before its launch and wanted in.
In November 2016, Udaan raised $10 million from Lightspeed Venture Partners in a Series A funding round. This was a huge boost for the business, as due to its size, they needed a lot of money to cover the initial expenses. Over the next two years, they relied solely on themselves, but in 2018 they raised a combined $50 million from Lightspeed Venture Partners, Lightspeed Venture Partners India, Appoletto, and Russian businessman Yuri Milner.
This money was used to expand the team, improve the software and technical infrastructure, and expand the company's offers.
That same year, only 26 months after launching, Udaan received Series C funding of $225 million, collected by DST Global and Lightspeed Venture Partners. In this funding round,the company was valued at $1 billion, making them the fastest-growing, as well as the youngest Unicorn-status startup in India!
In late 2019, Udaan raised another $585 million provided by eight different investors including Tencent Holdings, Altemeier Capital, Footpath Ventures, Hillhouse Capital Group, GGV Capital, Citi Ventures, Lightspeed Venture Partners, and DST Global.
Only a year after reaching Unicorn status, the company grew to more than double its initial value, then estimated between $2.3 and $2.7 billion.
Developing the Business
Udaan officially got registered as Hiveloop Pvt. Ltd., in 2016. The business was developed in several phases: Logistics; Networking between retailers and small-town suppliers; Finding a supplier chain including manufacturers;
Creating a product that would technologically empower people, while solving the most pressing problems for small business owners was obviously a profitable idea. Retailers, manufacturers, producers, wholesalers - the goal was to take all of them online and give them an opportunity to directly and easily find customers.
The main challenge the founders faced was educating people on how to come to the platform. However, they overcame this problem by creating a killer business plan and helping small business owners across India go digital.
So what was the plan?
Build a large network, implement lower pricing and secure all transactions and deliveries.
Very simple, yet so effective!
The other challenge was standardized pricing. Since all these people had to do offline business through third party agencies or middlemen, who would often trick them for money, or run away with their goods, they were just happy to get whatever they could. Udaan's team addressed this unfairness by conducting detailed market research, to understand various products pricing.
Thanks to the Series A investment round, they managed to employ an army of more than 8,000 people for the needs of this project, as otherwise, such a far-reaching network wouldn't be achievable. But once they had it, money started pouring in...
Today, Udaan has more than 1 million active retailers, happily using their services. More than 60 million small business entities use this platform to sell their products.
Udaan's drivers pick up products from 80-100 cities and deliver them across 800-900 locations, but the owners say that more than 80% of the demand comes from the top 30 Indian cities.
The platform works with various types of products: lifestyle, home & kitchen, pantry staples, food, toys, FMCG. They help small manufacturers, mills, brands, and farmers in more remote places sell their products everywhere in the country, at a very low cost.
Note: Udaan never meant to profit from the people they're helping. They don't ask them for large fees and commissions. Instead, they provide logistics, secure payment options, and a capital program used to finance manufacturers, to help them produce and sell even more through Udaan.
Another interesting fun fact about Udaan is that it doesn't have a CEO. Although this wasn't very good in the eyes of the investors, they decided to go for this policy, as they wanted their employees to feel like they were working on the Udaan project together, rather than working for some CEO. They embraced the power of decentralization, so in addition, they don't even have titles across the organization. At Udaan, they value the merit of discussion much more than the title of the person who's discussing.
By 2020, Udaan's worth has remained stable - $2.8 billion.
It seems that a marvelous idea combined with a community spirit can bring the recognition necessary to achieve a fast and steady growth!