Pune-based ElasticRun that connects FMCG (fast-moving consumer goods) and e-commerce companies with mom-and-pop stores in India’s rural areas, has raised USD 75 million in a round co-led by existing investors Avataar Ventures and Prosus Ventures. The funding round which saw participation from Kalaari Capital, has bumped up the valuation of the four-year-old startup to USD 400 million.
Prior to this round, the company had landed a USD 40 million check in primary and secondary funding in 2019. The recent capital infusion takes its total funding to USD 130.5 million to date.
Founded by Sandeep Deshmukh, Shitiz Bansal, and Saurabh Nigam in 2016, ElasticRun operates distribution networks for FMCG companies to help them reach local retail stores in rural and semi-urban areas. It also enables e-commerce companies reach customers in far-flung areas through its network of kirana stores [mom-and-pop stores].
It works closely with banks and financial institutions to help kirana shop owners get credit, thus increasing financial institutions’ footprint in rural areas.
The startup has more than 100 brands on its platform including top FMCG players such as HUL, P&G, ITC, Marico, Britannia, Colgate, Nivea, Patanjali, and Dabur. According to ElasticRun, these companies have used its platform to reach 125,000 retail outlets in the country across 300 cities.
“We want to expand our network to onboard at least a million retail outlets over the next 12–18 months and we need money for that expansion, besides spending on technology development,” Saurabh Nigam, co-founder, ElasticRun, told local media Economic Times (ET). The startup’s current annual run rate is about USD 350 million, which it aims to grow to over USD 1 billion in the next 12 months, he added.
According to Mohan Kumar, managing partner at Avataar Venture Partners, the company’s focus on using deep technology to address the need for commerce marketplaces has helped them scale rapidly, delivering much broader distribution for consumer product brands.
The company claims India has over 12 million kirana shops across the country, of which 10 million are in rural areas where sales are expected to grow to USD 600 billion over the next five years, from the current USD 250 billion.
“Over the last 18 months, our consumer products and food business serving the rural kirana shops has seen dramatic growth. The COVID-19 pandemic has enhanced focus for many brands towards rural markets, and our model has enabled us to deliver real value to them and grow our brand basket significantly,” co-founder and CEO Deshmukh told ET. “We expect 2021 to be our biggest year yet and are looking to more than triple our business over the next 12 months.”