Due to COVID 19 and the changing market scenario, the Indian startup market is witnessing an unprecedented boom, leading to massive fundings and strong balance sheets. March alone has seen Indian start-ups raise at least $2.8 billion across 93 venture capital and private equity transactions, an increase of 72% from March 2020. Pune-based kirana commerce platform ElasticRun, which connects FMCG (fast-moving consumer goods) and e-commerce companies with mom and pop stores in India’s rural areas, raised $75 million in a Series D funding round led Avataar Ventures, Prosus Ventures, and Kalaari Capital.
The company plans to use these proceeds to expand its reach in the rural market, enabling access for big consumer brands, food brands, and e-commerce platforms to kirana shops.
“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,” said co-founder Saurabh Nigam.
Founded in 2016 by Nigam, Sandeep Deshmukh, and Shitiz Bansal, ElasticRun operates distribution networks for FMCG companies to help them reach local retail stores in rural and semi-urban areas. The start-up also enables e-commerce companies to reach customers in far-flung areas through its network of kirana stores, working with banks and financial institutions to help kirana shop owners get credit, increasing financial institutions’ footprint in rural areas. In India, where most of the rural market is not digitized, small stores struggle to compete with e-commerce powerhouses, firms like ElasticRun view it as a massive untapped opportunity to aid these kirana stores.
India’s 12 million Kirana stores fall back behind e-commerce behemoths like Amazon due to the high-cost structures of traditional distribution networks, and their distance from cities, as well as small order sizes.
ElasticRun has come a long way, operating in more than 300 cities in nearly all Indian states. It works with over 125,000 neighborhood stores, and plans to expand to reach 1 million in 18 to 24 months, said Shitiz Bansal, co-founder, and chief technology officer of ElasticRun. The firm’s current run rate is about $350 million, a figure it plans to grow to over $1 billion in the next 12 months, he added. ElasticRun counts over a hundred famed brands on its platform, including HUL, ITC, Marico, Britannia, Colgate, Nivea, Patanjali, and Dabur.
“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,” ElasticRun CEO Deshmukh said. “We expect 2021 to be our biggest year yet and are looking to more than triple our business over the next 12 months.”
Mohan Kumar, the managing partner at Avataar Venture Partners, said that ElasticRun’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.