Gurugram-based online grocery startup Grofers is in talks to raise around USD 60-65 million from its existing investors in a funding round, sources told Mint.
The valuation of the online grocery store may drop by over 40 percent,they added. The funding round is being led by existing investor SoftBank with participation from Tiger Global Management participating. Sequoia Capital, however, may not participate in the current round, they added.
Grofers, run by Grofers India Pvt Ltd, raised USD 120 million in the last funding round at a valuation of about USD 400 million in November 2015.
On the business side, Grofers has shut its operations in several cities and changed its business model. The firm is now focusing in winning in the National Capital Region (NCR) by investing in improving its supply chain and technology.
The fundraising by Grofers is expected to help the firm sustain its fledgling turnaround.
Despite the investment, many startups such as PepperTap and GrocShop shut shop due to insufficient capital.
The food retail firms are facing intense competition from e-commerce firms such as Amazon and Flipkart. It was in 2017 that the government allowed Amazon, Grofers and BigBasket, all majority foreign-owned firms, to invest in food retail in India—giving a go-ahead to FDI proposals cumulatively worth Rs 3,750 crore.moneycontrol