FMCG-focused Dropshop raises Rs 9.3 crore led by Inflection Point Ventures

• Dropshop will use the raised funding to strengthen the product and scaling up its operations to increase the capability to handle more brands and enter new cities.
• This is IPV's 18th investment in 2021, plans to invest Rs 155 crore across 60 plus startups.
• Since its inception, the firm has invested over Rs 200 crore across 77 startups.

Bengaluru-based Dropshop, which helps FMCG brands to digitize their last-mile distribution, has raised Rs 9.3 crore (about $1.2 million) in a pre-Series A funding round led by angel investment firm Inflection Point Ventures.

Existing investors Axilor Ventures and The Chennai Angels also participated in the round with 42.vc joining the round via AngelList. 

According to the press release, Dropshop will use the raised funding to strengthen the product, scaling up its operations to increase the capability to handle more companies and expand to new cities. The startup is planning to expand its presence to new cities like Chennai and Hyderabad.

This is IPV's 18th deal in the Indian startup ecosystem in 2021. Previously, The firm had invested in the SaaS platform Glamplus. Acc. to the firm, It will invest up to Rs 155 crore across 60 plus startups in 2021.

Speaking on the development, Udit Dhawan, Founder & CEO, Dropshop, said:

 “As one of the largest sectors in India, FMCG is still run over the backs of thousands of traditional distributors. We have been working with several large and small FMCG companies in streamlining their last-mile distribution with technology for over a year now, and enabling them to reach their market potential."

"This round of funding will allow us to build over our existing products to grow our brand portfolio as well as retailer base. Our immediate focus is to strengthen our team, product, and processes for the next phase of growth, and we are delighted for the continued support of our existing investors and excited to have IP Ventures and 42.vc joining us on this journey."

Launched in 2019 by Udit Dhawan, Rohit Fernandes, and Ravi Teja, Dropshop develops a full-stack platform that helps FMCG companies to digitize their last-mile distribution like sales, logistics, and credit to retailers.

Dropshop has been able to demonstrate 30–100% high sales and fulfillment than traditional distributors for its FMCG customers. At the same time, it has enabled simple credit for thousands of underserved retailers who typically cannot avail formal credit due to lack of credit history and incomplete documentation, and have to rely on informal channels, the statement said.

Dropshop claims that its in-house credit decisioning models and low KYC have enabled embedded credit of over Rs. 40 crore to more than 10,000 retailers in Bangalore over the last 15 months and currently exploring partnerships with NBFCs and fintech players to expand this service to small retailers.

According to the press statement, Dropshop Network currently reaches more than 10,000 retailers in Bangalore. It counts ITC, Marico, Reckitt Benckiser, Mamaearth, Postcard, Nilgai Foods, and Godrej Consumer Products, as prominent customers.

The platform currently processes over 15,000 orders per month with Rs 4 crore GMV (gross merchandise value) per month, the statement added.

Mitesh Shah, Co-Founder, Inflection Point Ventures said:

“FMCG companies are often faced with a critical issue of increasing margins without burdening their customers. Traditionally, they have adopted the approach of building distribution and last-mile network in the house. Given the geography of India, it is not viable business-wise to create an expensive distribution network across the country. This is a completely untapped opportunity that Dropshop has identified and they are working aggressively to scale up. This is a newly emerging area where we expect more startups to enter making it an attractive sector to invest in.”

Jignesh Kenia, Lead Investor, IPV said: “For FMCG companies, setting up their own distribution network across the country could be an expensive affair and this is where Dropshop comes into play. With the help of technology, they are able to cover 90% of the region compared to 60 to 70% which is covered by the Traditional Distributors. This helps in optimizing distribution costs and increase Sales for their Customers. The whole idea of tapping into the FMCG distribution and logistics segment got us interested in leading this round."

According to the report by Technova and Modor Intelligence, the FMCG market in India is close to $100 billion, growing at 14% CAGR while 30% of the FMCG market is concentrated in the top 7 cities.

The report added that the largest brands in the country see retailer coverage of 50-60% in urban areas while 15-20% market potential is lost post demand capture due to inefficiencies in the last-mile supply chain and less than 50% of retailers have access to some form of working capital.

Also Read:

• SaaS platform Glamplus raises Rs 2 crore led by Inflection Point Ventures
• AI startup ORAI raises Rs 3.6 crore from Inflection Point Ventures
• PumPumPum raises $735K led by Inflection Point Ventures

Follow IndianStartupNews on Facebook, Instagram, Twitter for the latest updates from the startup ecosystem.