Bangalore-based Banger Tech Pvt. Ltd, which operates subscription-based milk and daily essentials delivery startup Doodhwala, has raised $2.2 million (Rs 14.27 crore) from impact venture fund Omnivore, two persons directly familiar with the development told TechCircle.
The sum was raised as an extension to the startup’s pre-Series A funding round, which it secured in August last year. At that time, it was reported that Tom Varkey, a partner at US-based hedge fund Stonehill Capital, had invested in the startup.
The startup raised this round at a post-money valuation of roughly between Rs 50 crore and Rs 55 crore ($7.7-8.5 million), which is a little over three-fold rise from its last funding round, the second person mentioned above said.
Doodhwala will use the fresh funds to expand its service into new markets, acquire talent and upgrade its technology, it said in a statement separately.
“The lean operating model and the direct sourcing relationships that have been built made this company stand out amongst competitors,” Jinesh Shah, founding partner at Omnivore, said in an e-mailed statement.
Reihem Roy, principal at the impact venture fund, will join the board of Doodhwala as part of this transaction, the investment firm added.
Founded in 2015 by Agarwal and Ebrahim Akbari, Doodhwala is a mobile-first subscription platform for milk and daily essentials. Apart from more than 70 varieties of organic, raw and commercial milk, the three-year-old startup delivers over a lakh of products such as eggs, baked goods, meat, fruits and vegetables, groceries and staples, health drinks, personal care, and hygiene products among others. The company claims that it makes the deliveries before 7am every day and handles more than four lakh deliveries in a month.
“Doodhwala’s business structure benefits customers, dairies and supermarkets. It makes farm-to-fork viable by taking over sales, marketing, logistics, and fulfilment for producers. Additionally, we are expected to scale easily due to our capital-effective model, paired with the high demand for milk and a need for regulated milk supply,” Agarwal stated.
For its milk delivery service, the company operates on a hybrid model which employs part-time delivery boys and milk suppliers. Currently, Doodhwala runs its services in Bangalore and Pune.
“By lowering our delivery cost to Rs 3, Doodhwala is uniquely positioned in a market where other players are struggling. We have done a great job of maintaining a steady month-on-month growth rate while scoring 85% customer retention,” Akbari said.
At the time of its previous funding round, Agarwal said the company was witnessing a customer retention rate of 80% and was also expected to turn operationally profitable by the end of 2017.
Startups in the online subscription-based hyperlocal delivery space, which offer daily essentials including milk, have recently caught investor interest.
In January, Gurgaon-based Aaidea Solutions Pvt. Ltd, which runs micro-delivery grocery startup Milkbasket, raised $3 million (around Rs 19 crore) from Unilever Ventures, the investment arm of FMCG major Unilever.
In December last year, online media publication Entrackr reported that subscription-based hyperlocal delivery startup Daily Ninja raised $1.5 million from Sequoia Capital.
In May last year, grocery subscription startup Supr Daily raised $1.5 million from Silicon Valley-based investors Soma Capital, Great Oaks Ventures and 122 West Ventures).
Besides such startups, US-based e-commerce giant Amazon also offers online delivery of groceries and daily essentials through its app Amazon Now. Last year in November, homegrown e-commerce major Flipkart announced a soft launch of its grocery delivery service under ‘Supermart’.
Founded in 2010 by Mark Kahn and Shah, Omnivore (earlier Omnivore Partners) invests in startups operating in agri-tech, food products and rural livelihoods, as per information available on its website. It has offices in New Delhi, Mumbai and Bangalore.
Early this month, Omnivore Capital Management Advisors Pvt. Ltd marked the first close of its second venture capital fund— Omnivore Partners India Fund II—at $46 million (Rs 296 crore). It is targeting a final close of the second fund at $75 million by August this year and will make its first two investments from that fund by March.
In December last year, it partially exited its stake in Noida-based weather forecasting services provider Skymet Weather Services Pvt during its Series C fundraise.