pivoted to the quick commerce segment, has closed an additional $100 million financing as a part of its ongoing fundraise, cofounder and chief executive Albinder Dhindsa told employees in an internal communication on the company’s Slack channel on Thursday.
The funds are being raised through convertible notes from Zomato, which will later be converted into equity, people aware of the discussions told ET.
This is a part of a larger $400-million funding Blinkit is looking to raise from Zomato and other investors, which is expected to close in the next two quarters, one of the persons aware of the discussions said.
This is in addition to the $100 million that Zomato invested in the company and its wholesale entity Hands on Trades last year, catapulting the quick commerce startup’s
valuation to $1 billion.
In August 2021, the Competition Commission of India (CCI) approved the investment.
ET first reported in November that Zomato
may invest $500 million in Blinkit to push its quick commerce ambitions, potentially valuing the company at $1.5 billion. The company has also raised the upper limit of its potential investments in the quick commerce segment, it said last month. However, the volatility in the public markets and its effect on Zomato’s share price has delayed the round, which was expected to be closed by March.
“The market conditions have affected Zomato, and thus Blinkit’s planned fundraising. The funding is expected to be negotiated again, with fresh terms. To go ahead with its plans, Blinkit, for now, has raised the first tranche of $100 million from Zomato,” a second person told ET.
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Focus on operations
In an internal note to Blinkit employees, Dhindsa wrote that the company would continue to focus on growth, reducing its burn rate, and improving its speed of execution.
“We have closed our next fundraise ($100 million) and will have money coming into the bank over the next week. We have come a long way in the last eight months by transitioning the business to the largest instant commerce player in the space,” read Dhindsa’s note.
“Our next chapter should give Amazon a run for its money,” he added.
Blinkit had first announced its pivot to the 10-minute instant grocery delivery space in August 2021, and initially launched the service in the top 12 Indian cities.
The company has an on-ground workforce of 30,000 and has opened 450 new warehouses and dark stores to scale its quick commerce plans. The company has taken tough calls, such as shutting 40 of its warehouses, to streamline operations.
Zomato’s quick commerce ambition
While announcing its December quarter results, Zomato said that it continued to be bullish on quick commerce and would potentially
invest an additional $400 million in the space over the next two years.
“We are very bullish on the product-market fit, unit economics, and growth trajectory of the quick commerce category. It reminds us of the food delivery category a few years ago, when many platforms competed over a large and growing market but ultimately only the few that delivered exceptional experiences to their customers survived,” Zomato said at the time.
“We are becoming increasingly confident in our decision to invest behind market leadership here with healthy unit economics. As a result, we are updating the upper bound of our potential investments in this category to $400m cash over the next two years,” the company added.
Zomato’s share price rose 2.3% to close at Rs 82.2 on BSE on Thursday. The stock has shed over 41%, in the past three months owing to a sell off in tech stocks and, more recently, increased volatility due to Russia’s invasion of Ukraine.
