Pune-based ElasticRun, a platform that connects FMCG (fast-moving consumer goods) and ecommerce companies with mom and pop stores in India’s rural areas, has raised US$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 US$400 million.
Prior to this round, the company landed a US$40 million check in primary and secondary funding in 2019. The recent capital infusion takes its total funding to US$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 ecommerce companies to reach customers in far-flung areas through its network of kirana stores (mom and pop stores in India).
It works closely with banks and financial institutions to help kirana shop owners get credit, 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 to 18 months and we need money for that expansion, besides spending on technology development,” Nigam told local media Economic Times. The startup’s current annual run rate is about US$350 million, which it aims to grow to over US$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 it scale rapidly, delivering much broader distribution for consumer product brands.
According to ElasticRun, 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 US$600 billion over the next five years.
“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 toward 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 the Economic Times. “We expect 2021 to be our biggest year yet and are looking to more than triple our business over the next 12 months.”
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