SHRI RAMDEOBABA COLLEGE OF ENGINEERING

AND MANAGEMENT, NAGPUR.

Entrepreneurship Development Assignment 1

Course Code: - INT365
Semester: - VI
Name: - Prajwal.P.Rahangdale
Roll No.: - 102
Branch: - Industrial
Guided by: - Prof. M.R.Jain
Case Study: - The success story of B2B Start-up: -
Udaan

Site: - https://udaan.com/

Introduction
Udaan is one of the uprising start-up companies gradually gaining popularity
with business owners and merchants. Udaan is a three-year-old start-up
company and continuously on the rise in terms of popularity and size.
Udaan is a B2B company owned by Hiveloop. Udaan was started by three ex-
Flipkart employees Vaibhav, Amod, and Sujeet. As expected, the website and
platform of Udaan became immensely popular with all the traders and people
in the business.
This shows that all three founders dedicated time and hard work towards
Udaan.
Manufacturer, retailers and wholesaler are found everywhere. The word
marketplace is also very common. These are the few important words with
which Udaan is specially built. Manufacturer, retailers and wholesalers all are
having their own problems as new manufacturer remain overwhelmed to bring
up new decisions. Retailers need the experience to understand marketing.
Wholesalers always face an increased need for manufacturers. These are the
few common problems faced by all.
These three founders had one goal in mind, to create a platform or a product
that revolutionized the business industry and helped all the small-time
merchants. This platform gave freedom to a large number of people. The
success story of Udaan has been sensational to say the least.
The main objective is to connect retailers, wholesalers, and manufacturers
through the platform.
Udaan helps the users to know the reality of market trends and other premium
B2B business aspects.
Udaan has helped the small-sized business owners to utilize the power of
technology to grow their businesses. In this time of strong competition, Udaan
has grown its business in a short period of time. Because of which it has
become India’s fastest unicorn.
According to reports, the marketplace has been the fastest Indian start-up to
reach in merely 26 months to reach a valuation of 1 billion dollars.
The Founders

Amod Malviya
Amod Malviya is the person who built the backbone of Flipkart by working as
the CTO till July 2015 and making Udaan the fastest-growing trade network. He
and his co-founders’ are worth 1000 crore each. He has given chance to more
than 200 employees to be a part of Udaan. He feels that the similarity between
B2B and B2C systems is just 40 to 50 percent.
A chief technology officer (CTO) is the executive in charge of an organization's
technological needs as well as its research and development (R&D). He or she
develops policies and procedures and uses technology to enhance products and
services that focus on external customers. The CTO also develops strategies to
increase revenue and performs a cost-benefit analysis and return-on-
investment analysis.
He completed his education at IIT Kharagpur. He feels that technology and the
birth of smartphones have completely changed the way we interact with
people. His team impressed other investors to invest in Udaan, even before its
launch.
Tech is a tool, not a master — Amod Malviya
Vaibhav Gupta

Vaibhav Gupta graduated from IIT Delhi and has also attended the Darden
School of Business. He was the SVP (Senior Vice President) of business finance
and Analytics at Flipkart. Before jumping into Flipkart, he has worked as an
Engagement Manager in McKinsey and Company and as a Senior Consultant in
Trilogy E-Business & Co.
The SVP is responsible for helping a company to achieve financial goals and
objectives and increase operating performance. He/she prepares budgets,
creates businesses plans, and solves internal issues as they arise.
He knew that if Udaan wants to connect with 50 million small businesses
across the country, it will only be possible through the technology of
smartphones. He also coined the name ‘Udaan’ which refers to India, meaning
‘The rise’. As long as the right product is built, the adoption rate of it will also
be bigger like that of the case of WhatsApp.
Sujeet Kumar

Sujeet Kumar is the co-founder of Udaan. He pursued his B. Tech degree in Civil
Engineering from Indian Institute of Technology, Delhi.
As mentioned above, Sujith Kumar worked at Flipkart before launching Udaan.
Sujith Kumar mentioned that he tried hard to pass the UPSC exam multiple
times. Hence, after that, he moved to the IT Capital of India, Bangalore. Here,
he started working for the E-commerce giant Flipkart.
How did it start?
Udaan India was founded in 2016 and is based in Bangalore. Vaibhav worked
there as a senior vice president, Sujeet worked in the supply chain as a logistics
executive and Amod worked as the Chief Technology Officer.
Initially, Udaan started as a logistic platform for small buyers and sellers in
electronics. They focused on this only for 8 - 10 months. Next, they got
exposure within India which was very important for them as a start-up
company. During those days Udaan built their database strongly before
stepping into the supply business.

What is its goal?

Besides connecting retailers, wholesalers, and manufacturers.
Also, the goal of Udaan is to cut the excessive middlemen between the
customer and the factory product so that the customer gets the product at the
best prices. Usually, most of the firms have to go through two to three layers
like exclusive wholesalers and distributors.
Other aim of starting this business was to make the goods reach the remotest
areas of the country like Bhabua in Bihar. While working in Flipkart, they had
realized how the company had such a strong distribution network but was still
unable to reach these places.

Udaan wants to solve credit underwriting problem, B2B logistics, payment and
sales and marketing. The ultimate goal will be to benefit the both customer
and the retailer.
How is it different from the rest of the websites?
Small and medium-sized sellers could use the platform to build their own
brands, something which is difficult when done on consumer-based portals
such as Amazon and Flipkart.
Udaan not only acts as a market place for the sellers and buyers but also takes
care of the logistics and payments. These two factors are crucial and should be
taken care of if the business trade has to be successful between the two
vendors.

Business Model

Udaan funds the capital for its buyers and charges interest on it. In simple
words, the customer can buy directly from the marketplace, and further sell it
in their local stores or have it for personal use.
Udaan is a platform that targets the back-end of a market. This is the part or
process that takes place behind the scenes in an exchange or an e-commerce
website.
For example, a customer accessing Flipkart and purchasing an item can just see
the order and its shipment. But, behind all this, a vast process is involved. The
merchant offering or selling that product has to go collect the product and
deliver it to a Flipkart storehouse. This is just a part of it. Hence, Udaan tried to
make this process more comfortable and even succeeded at it.
A large, disorganized and fragmented market gives rise to a disruption in the
business industry.
Now, Udaan created while keeping one thing in mind; to make the difficult and
complicated parts of trading simple, safe, and convenient.
Business to Business(B2B) commerce is now on the rise. When managed
efficiently in terms of logistics, sales, and marketing, this industry might even
reach or has the potential to become a $1 Trillion industry in the coming years.
Note: According to a report or statement released by Walmart, Indian’s B2B
commerce industry has the potential to grow to $700 Billion in the next five
years.
Hence, Udaan is a B2B trade platform that gathers and brings all the
manufacturers, wholesalers, and retailers to a single platform. This makes the
whole B2B process a whole lot easier in India. Now, all the manufacturers can
present their product on this platform, and interested traders have the
freedom to select and buy it. Retailers and wholesalers also have the same
freedom to advertise and buy a product.
Udaan features a wide range of products like electronics, home and kitchen
supplies, stationery, toys, and even fruits, vegetables, and other cooking items.
Currently, Udaan has raised more than half a billion dollars in a new financing
round. This is because even all the Kirana(groceries) stores and chemists
started registering for the platform.
Udaan also offers a credit system or credit line for its users. This means that
even the sellers can avail it.
According to Vaibhav Gupta, one of the co-founders, this helps all the small
and micro businesses and its owners nation-wide.
Also, Udaan enables a direct connection between buyers and sellers and allows
one-on-one conversations to enable negotiations between the transacting
parties. This personal chat feature is encrypted and very secure.
MARKET CAPITALIZATION

 Funding
Soon after the platform was made public, Udaan raised funding of
approximately $600 million led by companies like Tencent, Altimeter,
Hillhouse, Citi Ventures, and GGV Capital.
Currently, Udaan’s valuation is approximately $7.5 billion. After 2017, the
company raised a significant amount of capital.
The co-founder said these fundraisers should be directed towards expanding
the platform’s reach and expanding its chain to reach more merchants and
customers.
Udaan achieved the coveted unicorn status in September last year. This is one
of the few start-ups to cross a private valuation of one billion dollars soon after
it was launched.
  The Revenue model of Udaan
The revenue model of this start-up company given in detail:
-The primary revenue model of Udaan is through commission fees on
transactions made by the merchants. It also charges for logistics.
-As known, financing working capital is extremely difficult for end retailers. This
ends in them borrowing from local lenders whose interest rates are out of the
world.
This is where Udaan comes into play; the platform intends to be a working
capital ‘loan’ for them. And the best part is, the interest rates are very
reasonable. By following this scheme, Udaan’s loan book is filled, and the
platform has approximately given out 170 to 200 crores as loans. They intend
to take this up to 750 crores by the end of this fiscal year.
Udaan is now gaining popularity in the B2B businesses, as none of the start-ups
made this far into the market.
The B2B marketplace segment counts platforms such as IndiaMart, ShopX, and
many more. But, Udaan has successfully made a dent in the business sector
and can end up becoming one of the largest companies in the B2B industry.

 Udaan’s ranking through the valuation report

As mentioned above, this is one of the most successful start-ups in India. This
Bengaluru-based firm is valued at $7.5 billion as if 2020. This makes it the
fourth-most valued start-up in India. The list of the four most valuable
companies is given below.
Paytm- $16 Billion
OYO – $10 billion
Byju’s – $8 billion
Udaan – $7.5 billion
But, according to a report, it is estimated that Udaan will reduce its losses to
₹375 crores in the Financial Year of 2021. Hence, this registers a profit before
tax of Rs. 3,082 crores in the Financial Year of 2022.
It is reported that Udaan has given valuation by estimating cash flows and
values of the next nine fiscal years.

 Udaan funding in terms of series

Series A: The initial or Series A funding was initiated in November of 2016. The
total amount raised was approximately ten million dollars. As predicted, the
post-money valuation was about forty million dollars. The initial or series A
investors of Udaan are Lightspeed Venture Partners.
Series B: After the success of the initial Series A investing, many companies
started funding this start-up. Udaan began to the Series B funding in February
2018. The total amount raised by a Udaan was approximately fifty million
dollars. The post-money valuation was impeccable as it reached about 200
million dollars. This was the breakeven point of Udaan as they saw profits at a
marginal rate. The series B funds were invested by Lightspeed Venture
Partners, Yuri Miner, and Lightspeed India Partners.
Series C: The series C or the third round of funding took place in September of
2018. By this time, the start-up was hugely successful and accessible to
business transactions and markets within the business. Hence, the number of
investors went down. The total amount raised or invested in the Series C
funding of Udaan is approximately 225 million dollars. The post-money
valuation resulted in nearly one billion dollars. This was a record, and Udaan
came to be known as one of India’s most successful start-ups. Lightspeed
Venture Partners and DST Global invested the series C funding.
Series D: The series D funding round took place last year, that is, October of
2019. The total amount raised through Series D funding was approximately 600
million dollars. The post-money valuation hit the roof as the full money raised
through post-money appraisal was about 2.7 billion dollars. This round saw
many investors like GGV Capital, Lightspeed Venture Partners, DST Global, Citi
Ventures, Altimeter Capital, Tencent Holdings, Hillhouse, and Footpath
Ventures.
Unattributed round: The unattributed round took place in March 2020. The
amount raised approximately thirty million dollars and invested by Trust root
Internet.
Major products offered thru Udaan

Udaan caters to products from multiple categories like Electronics &

Appliances, Clothing & Accessories, Footwear, Food & FMCG,
Pharmaceuticals/Medicines, Home & Kitchens, Electricals, Toys, Baby & Sports
and more.
Suppliers can get orders from buyers across the country.
Challenges faced on initial stages
As a start-up in the e-commerce sector, Udaan has to face its fair share of
challenges.
One of the major challenges it faces is the establishment of a proper supply
chain network. This is one of the most important things to look at when a
business is operating in the e-commerce sector.
This is especially important when an e-commerce site has to compete with big
brands and other e-commerce giants. Getting its logistics and distribution
system in place is very important.
Another challenge is to persuade and convince retailers and wholesalers to go
online with their business. This is a challenge that Udaan had to face initially.
In India, many such small business owners still operate in the traditional offline
mode and so they might not be ready to accept any change in their way of
thinking. So, bringing such businesses on board was a very integral part of
making its B2B model a success.

Why is it successful?
Amod in a discussion with the media stated that the company was successful
because they eliminated the tech productivity killers and allowed the
engineers to thrive in their creativity. For more than a year and a half, Udaan
did logistics on subsidized rate and it helped them to gain significant exposure
within the community.
Another secret sauce for the success of Udaan was the strong founders' team.
They were best at what they did in Flipkart and were appreciated for it. When
other Flipkart employees got to know about the birth of the start-up, they also
quit their jobs and extended their support with the founders’ trio. So, on Day 1
the work productivity, was at its best which most of the companies lack due to
experience in the field. But they already knew the execution, the only thing to
be done was the workflow of executing it in smaller towns.
The story Udaan solves is of the small retailer who belongs to a small town
usually going to the bigger cities and purchasing and selling goods in bulk even
though there are bigger competitors than him. And ultimately, he risks his
capital, business and ends up shutting down in most of the cases. Udaan solves
this huge problem of the common retailer who belongs to the core part of
India’s public i.e. the middle class.

Udaan – Competitors
The top competitors of the company are ZoomTail, Bigtrade and Tradekosh.
-Zoomtail is the number one competitor of Udaan. Zoomtail is also a B2B e-
commerce platform but it specialises in fashion consumer goods.
-Bigtrade is one of the top rivals of Udaan. It was founded in the year 2017. A
year later than Udaan. It is also headquartered at Bengaluru, India.
-Tradekosh is a Pune based startup company which came into existence just
two years ago, 2018. Tradekosh is in the third number in rivalry with Udaan. It
is also an online B2B platform that connects retailers and manufacturers. It's a
bit different from Udaan.
TECHNOLOGY USED IN THE INDUSTRY
Not many people know that Udaan was part of the 2016 cohort of Microsoft
Accelerator (now Microsoft for Start-ups).

According to Amod Malviya-

“Azure allowed Udaan to have an extremely lean engineering setup. For
example, the day Udaan was valued at a billion dollars, they just had 17
engineers. That’s the kind of productivity improvement that Microsoft Azure
offered to Udaan.
Udaan decided not to have any engineer focused on infrastructure. They let
Microsoft take care of that with the PaaS offerings on available Azure. They
were able to focus every single engineer on a product problem.
They are a big consumers of Microsoft’s cloud offerings, including Data Lake,
Cognitive Services. For instance, they also run a credit business and regulations
which requires consumers to go through a KYC process. By doing his they
wanted to ensure that customers upload the right photos and documents by
prompting them in real-time whether the document they have uploaded are
correct or not. With the help of Microsoft’s Vision API, just one engineer was
able to create a solution in less than a week!”
Future Plans
As of 2020, a wide range of farmers, merchants, and shopkeeper owners are
connected to Udaan. Now, the platform supports half of the merchants in the
country and has set up a chain network all across the nation to fulfil the orders
on its platform.
As mentioned above, the business to business market is currently on the rise
and is expected to be worth approximately a Trillion dollars by the next two
years. Hence, the co-founders of Udaan did the right job at the right time by
starting a B2B retail start-up company.
The company is estimated to reach a ten billion dollars hit in the next two
years.
According to co-founder, Sujith Kumar, the start-up is planning to use the fresh
and flowing capital to expand its supply network and reach out to more
merchants and retailers. 
Besides this, Udaan is also planning to scale up Udaan Capital.
Udaan always welcomes the idea of merging with the partners and start-ups
who are interested to collaborate with it as they don’t build everything in-
house and even investing in them.

Effect of the pandemic on Udaan

Many workers and employees faced a tight situation as the epidemic took over
the world. Even well-known companies started firing employees as they
couldn’t afford to pay them. The most hit sector was the IT sector. Many start-
up companies hit rock bottom during the last three to four months. Many
start-ups shut down their business and permanently closed the company due
to the exponential losses due to Coronavirus. One of the start-ups which faced
a tough time was Udaan.
Udaan fired several of its employees who were working on a contractual basis
for this company.
According to the co-founders of Udaan, all the employees who were fired were
provided with additional compensation of one month and would be taken back
by the company when an opportunity comes up.
The company also wrote a positive recommendation letter for all the fired
employees to make it easier for them to find a new and better job.
Fortunately, the associates who are covered under the medical insurance
scheme shall be given medical benefits for an additional period of three
months.

Conclusion
Udaan sets an inspirational ground for various other start-up companies that
have sought to gain success in the e-commerce sector. Udaan is one of the few
firms which has occupied a dominant position in the sector in a very short
period of time, making its success story a pretty interesting one.

THANK YOU.