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Kalaari, Nexus Venture invest $8.5 mn in grocery marketplace Jumbotail

06 July, 2017

Bengaluru-based online marketplace for food and grocery Jumbotail Technologies Pvt. Ltd has raised $8.5 million (Rs 55 crore) in a Series A round from Kalaari Capital Advisors Pvt. Ltd and existing investor Nexus India Capital Advisors Pvt. Ltd.

According to a statement put out by the company, Jumbotail plans to use the funds for building its technology infrastructure and enhance operational capabilities “to deliver the best customer experience in the wholesale food and grocery sector”.

“About 98% of India’s food and grocery consumption is via kirana stores. We are excited by Jumbotail’s ability to eliminate information asymmetry, aggregate previously unavailable demand-and-supply data, and significantly improve economic outcomes for manufacturers, brands, financial institutions and kirana owners,” said Bala Srinivasa, partner, Kalaari Capital.

In its first external funding round, Jumbotail had raised $2 million from Nexus in July 2016.

Founded in November 2015 by Stanford alumni S Karthik Venkateswaran and Ashish Jhina, Jumbotail offers a wide selection of products, including staples, spices, dry fruits, packaged foods and other FMCG merchandises.

The Jumbotail app is available in four languages – Kannada, Malayalam, Hindi and English. Customers can choose from a variety of products listed on the platform by traders, manufacturers and brands. “Jumbotail also opens up the kirana network to financial institutions looking to extend credit in a cost-effective and scalable manner,” said Jhina.

The company claims to provide full-stack services, including storefront delivery and payments collections for its sellers, as well as working capital credit from third-party credit providers to its customers using transactional data and proprietary algorithms.

According to a recent report by India Brand Equity Foundation, India’s food retail market is expected to reach $915 billion (Rs 61 lakh crore) by 2020.

BigBasket and Grofers are leading players in the e-grocery space. BigBasket, operated by Bengaluru-based SuperMarket Grocery Supplies Pvt. Ltd, works on an inventory-led model and has so far raised about $250 million in external funding. It had registered a three-fold year-on-year increase in revenue to Rs 563 crore in 2015-16.

Grofers, which started as a marketplace model, recently moved to an inventory-based platform. It has raised about $200 million and counts SoftBank, Tiger Global and Sequoia Capital as its investors. However, the company’s rapid expansion plans and subsequent high costs forced it to curtail operations in many cities in the past one year. It has also laid off workers, besides changing its business model.

The e-grocery segment has been going through trying times since mid-2015, with funds from investors drying up, margins remaining wafer-thin and high cash-burn rates. At least half a dozen startups in the segment had to shut shop in 2016 alone. Snapdeal-backed PepperTap, for instance, downed the shutters on its grocery delivery vertical to focus only on its logistics business. Mumbai-based online supermarket LocalBanya have also closed down.

However, the sector has witnessed green shoots of a revival in fortunes. e-Grocery suddenly seems to a hot bet for both online and offline retailers in the country. The segment is gearing up for more competition as Amazon is reportedly eyeing entry into the segment through the acquisition of BigBasket. Tata Group is also in talks with Gurgaon-based e-grocery startup GrocerMax, while Flipkart plans to take a second attempt at the grocery business.

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Kalaari, Nexus Venture invest $8.5 mn in grocery marketplace Jumbotail

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