Sramana Mitra: It sounds like when a situation like that arises, your global fund or Silicon Valley fund is bringing in the capital to match the round. Anyway, we don’t need to belabor the point. You were going to talk about Udaan.
Hemant Mohapatra: It’s a very India-centric problem. Commerce in India has always been depended a lot on one-on-one relationships and offline chanels. They’ll call somebody up and somebody will say, “I’ll give you this at this rate. I will negotiate. I’ll deliver here. You come there to pick it up.”
It’s almost like secret signs that you know if you know. If you don’t, you just don’t. Udaan was funded by three very early ex-employees of Flipkart, one of the largest e-commerce companies in India that was recently bought by Walmart for a fairly large valuation.
Among the founder was Amod Malviya – CTO of Flipkart – and there were a few other folks that built the ops and supply chain network for Flipkart. They were very familiar with how this business is operated. They got out of Flipkart two years ago. They said “We want to solve this whole e-commerce.”
It speaks about Amazon and Flipkart. What about the commerce that happens between businesses? It’s not just business to consumer. What about business to business? Who’s taking care of their supply chain? Who’s doing logistics for them? Who’s doing discoverability for them and moving pricing for them? There’s nobody doing that in a systematic tech-driven way.
They built a company called Udaan to do that. They have just scaled up tremendously. All their GMVs are in the billions. They all happened in the last one and a half years.
The reason they were able to do that was because they have the right foundation. They knew what the pain points were and how strongly they were felt. Then they met us. They didn’t have a product. They didn’t have any sort of signs of execution that works. They had a concept and they had a team.
We put in a very large check, $10 million, into the company at a very early stage. It was a very large round for us. Given a fund our size, I can imagine it was out there from a comfort zone perspective. It wouldn’t be easy to expose so much capital into a company that has nothing more than a very clean idea and a very strong team.
But we did think bottoms up about that opportunity. We did really do our work. We understood that there is certainly a need and we said, “This need can only be solved by these guys. Why not go hard and hungry in this deal versus doing piecemeal?” We did that. They worked really well.