Grofers, a quick-delivery service for groceries and electronics from neighbourhood stores, is in talks with investors including Japan's SoftBank for funding of Rs 650 crore ($100 million), according to two people aware of the development. A venture capital investor privy to the talks told ET that "the company is looking to close the round at a valuation of between $300 million and $400 million".
If the deal fructifies, it will mark an over ten-fold increase in valuation and the third round of funding this year for the Gurgaonbased startup.
In February, Grofers was valued at $33 million and it has so far raised a total of $46.5 million in venture funding. "It is still relatively early in the process and the deal is the middle of the due diligence process," said one of the people quoted above. Grofers, founded in December 2013, has also held talks with Russian billionaire Yuri Milner's DST Global.
But SoftBank, whose president is the India-born former Google executive Nikesh Arora, is now in talks to lead the round, sources said.
Grofers cofounder and CEO Albinder Dhindsa declined to comment when contacted by ET. A SoftBank representative said in an email response, "We do not comment on speculation." DST Global did not reply to emailed questions.
The new fundraising comes as Grofers founded by IIT graduates Dhindsa and Saurabh Kumar gets ready to compete in the so-called hyperlocal delivery space with larger players such as Flipkart, Snapdeal and JustDial besides grocery delivery firms like BigBasket and PepperTap.
Over the past year, SoftBank has become the most aggressive investor in Indian startups, backing Snapdeal, Ola, Housing and Oyo with over $1 billion in total funding. SoftBank founder Masayoshi Son pledged last year to invest $10 billion in India over a decade.
Grocery accounts for over 70% of India's total retail market of $350 billion, according to a recent report on the Indian Internet market by IIFL. "Our interactions indicate that the top three brick-and-mortar grocers invested $2-3 billion in the past three years. Despite such investments, the share of organised grocery retailing remains low.
This provides a significant opportunity for an online grocer," said the report. This has made it the next big battleground for Indian Internet companies, as large online retailers who have raised billions in funding look to boost their gross merchandise value (GMVs).
"Grocery is an easy category to grow and the business has high repeat orders; ticket sizes are also high. And online retailers need to double their GMV in the next six months so they are looking to go after additional markets which can grow," said the venture capital investor mentioned above.