Hot on the heels of Indian delivery startup BigBasket raising $150 million — at a unicorn valuation, no less — so its close rival Grofers has also pulled in capital after it announced a $200 million raise to battle its local competition and international giants Amazon and Walmart.
The round is the largest in India’s online grocery sector to date, and it was led by SoftBank’s Vision Fund, which continues to make major bets on the nation’s growing internet economy. KTB, and existing investors Tiger Global and Sequoia Capital also took part.
Five-year-old Grofers works with more than 5,000 stores in 13 cities in India. In an interview with TechCrunch, Albinder Dhindsa, cofounder and CEO of Grofers, said the startup will use the fresh capital to expand to new markets and bring its service to “hundreds of millions of Indian consumers,” although he didn’t specify exact launch cities.
Dhindsa said that Grofers does not want to expand to new cities for the heck of it. Instead the startup focused on entering a city and growing its business profitable there. Grofers is already profitable in Delhi and will soon be profitable in Kolkata, he said. In Southern Indian markets such as Bengaluru, the startup is working to gain foothold.
The startup is rivaled by a number of players, including BigBasket, which raised its round earlier this month from Mirae Asset-Naver Asia Growth Fund, the U.K.’s CDC Group and Alibaba. The duo also faces competition from hyperlocal player Dunzo, and delivery startup Swiggy, which recently entered this grocery delivery space.
However, more concerning for them is the growing ambitions of Amazon India and Walmart’s Flipkart, both of which are quickly expanding their businesses in India. Amazon’s Pantry and Prime Now services jointly have a presence in more than 100 cities, while Flipkart Group CEO Kalyan Krishnamurthy has publicly expressed an intention to pilot a fresh foods business in the nation. Dhindsa argued that these players are not really a significant competitor to Grofers yet.
The foods and grocery market is growing in India. According to some estimates, it will reach $869 billion in sales in 2023 with digital-based services seen as an important vector for growth. This is likely only the start now that SoftBank’s Vision Fund has entered the space through this deal with Grofers.
Other investments in India from the near-$100 billion fund include budget hotel startup OYO, which has now ventured into Europe, Flipkart — although the fund exited after the Walmart sale — Paytm, and PolicyBazaar. With reports suggesting the fund will open a dedicated office in India, you can bet that there’s a lot more to come.