Online grocery store Satvacart has raised an undisclosed sum in its pre-Series A round of funding from several wealthy individuals, a top company executive told VCCircle.
The high-net-worth individuals who participated in the round include Keshu Dubey, the founder of startup database platform Xeler8, and Shishir Kumar, a former top executive at security solutions firm Symantec India, Rahul Hari, founder and chief executive of Satvacart, said.
As part of the deal, Kumar was appointed as the chief operating officer at the grocery e-tailer. An alumnus of IIT Roorkee, he has over three decades of experience in scaling up SOP driven businesses. He has previously worked with Cisco, Nortel Networks and Tata Telecom.
“We believe Shishir’s experience in scaling up businesses will come in very handy in our next phase of growth, whereby we move from an unstructured startup mode to a stable and structured organisation,” Hari explained.
The company was founded in January 2015 by Hari, an IIT BHU graduate. He has previously worked at travel aggregator Cleartrip and data management firm NetApp.
Satvacart Innovative Concepts Pvt Ltd, which runs the e-grocery venture, follows a hybrid business model. It sources from neighbourhood stores in addition to stocking its own inventory.
“We will soon break even, driven by the efficiency of operations through the implementation SOPs and automation,” said Kumar.
The company, which offered its service on a subscription-based model, has withdrawn it due to low margins. The company currently operates at a healthy contribution margin of Rs 52 per delivery powered by an industry-best cost of Rs 60 per delivery. As the firm scales up, the cost per delivery will go down to Rs 40 with increasing gross margins, thus improving the contribution margins even further, founder Hari explained.
The company had previously raised funds in several angel rounds. It raised its first round of angel funding in July 2015 from Palaash Ventures and a group of investors. In November 2015, it secured about $1.8 million (up to Rs 12 crore then) in its second round of angel funding from HNIs and existing investor Palaash Ventures.
In October 2016, it raised its third round from several investors including serial entrepreneur and angel investor Nimit Panigrahi.
Online grocery is set to witness hectic activity in times to come, as the country’s e-commerce majors have identified it as the next big battleground. Getting a stronghold in the space ensures frequent repeat purchases and a boost to gross merchandise volume.
Last month, the Competition Commission of India approved Chinese e-tailing giant Alibaba’s investment in online grocer BigBasket. The investment will also grant homegrown e-wallet company Paytm pole position in the e-grocery segment. Alibaba is a significant shareholder in Paytm. Media reports in September last year said that Alibaba and Paytm were set to invest about $200 million (Rs 1,277 crore) in BigBasket.
In November 2017, homegrown e-commerce major Flipkart also announced its second innings in the space through a soft launch of its grocery delivery service Supermart.
A report last year by research firm RedSeer says India’s online grocery market was on track to hit $1 billion in 2017, driven by strong growth in transactions and average order value.