New funds enable market expansion to enable access for the ‘next billion’
Mumbai, NFAPost: ElasticRun, a Kirana commerce platform, enabling access to potentially ten million rural Indian kirana shops, announced today the closing of a $75 million fundraising round co-led by existing investors, Avataar Ventures and Prosus Ventures, with participation from existing investor Kalaari Capital.
The new investment round will help the company expand its reach further into rural markets, enabling access for big consumer brands, food brands and e-commerce platforms to kirana shops – the cornerstone of Indian retail. India has over 12 million kirana shops across the country.
Ten million of these are in rural markets, where sales are expected to grow to $600 billion over next five years. These rural stores remain underserviced by consumer brands as a result of both the high-cost structures of traditional distribution networks and the rural kirana’s long distances from the cities and small order sizes.
The ElasticRun platform delivers a range of physical and digital services to its market of ten million rural Indian kirana shops:
- Large consumer products and food brands gain high scale, low-cost distribution to these traditionally underserviced stores, significantly increasing their market access.
- Ecommerce companies can reach customers in more remote areas through delivery services provided by the network of rural Kirana stores.
- Banks and financial institutions can get closer to a new set of underserviced small business customers from the rural Kirana network.
- Brands can access deep data insights derived from consumption data from the stores.
So far, more than 100 brands have entrusted ElasticRun and its 500+ distribution stations as their partners for extending their reach further into rural India.
ElasticRun Co-Founder and CEO Sandeep Deshmukh said over the last 18 months the company’s 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,” said Sandeep Deshmukh,
At the same time, he said 2020 has seen one of the biggest growth spikes in our store network and ecommerce business.
“As we continue to extend our reach deeper into the country through our logistics and transaction platforms, we have also been adding new capabilities such as credit and analytics layers to the core platform. We expect 2021 to be our biggest year yet and are looking to more than triple our business over the next 12 months,” said Sandeep Deshmukh.
Avataar Venture Partners Managing Partner Mohan Kumar said it’s a privilege to co-lead the investment into ElasticRun.
“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, while also creating a level playing field for the kirana stores – giving them parity with competing e-commerce players in terms of reach and product selection,” said Mohan Kumar.
Prosus Ventures India Head of Investments Ashutosh Sharma said the company is delighted to see the progress ElasticRun has made since we made our first investment 18 months ago.
“The ElasticRun team have more than weathered the extreme headwinds caused by the pandemic. Due to their focus on delivering value for all their partners, they are entering 2021 in a very strong position for continued growth,” said Ashutosh Sharma.
As part of the Series D, Kalaari Capital is buying shares from the ElasticRun Employee Share Ownership Program (ESOP) – set up to enable ElasticRun’s initial employees to share in the success of the business.
ElasticRun Founder, Saurabh Nigam commented, the Series D round is a special one for the company, as it marks the first time early employees can access the tangible benefits of the company’s growth over the last five years.
“This is validation of our philosophy of enabling all our colleagues to gain long term wealth creation as reward for their hard work,” said Ashutosh Sharma.
Small Kirana stores
ElasticRun is the Kirana Commerce Platform, enabling businesses to reach small Kirana stores in the deep rural parts of India. The company acts as an extended arm of FMCG companies’ direct distribution networks in the rural area to provide a set of net new customers to the FMCG companies.
ElasticRun also helps eCommerce companies reach the customers in far flung areas through its network of rural Kirana stores and brings banks and financial institutions closer to a new set of underserviced SME customers from its rural Kirana network. ElasticRun was founded by Sandeep Deshmukh, Shitiz Bansal and Saurabh Nigam in 2016. It is backed by Prosus Ventures (formerly Naspers Ventures), Kalaari Capital and Avataar Ventures.
Prosus is a global consumer internet group and one of the largest technology investors in the world. Operating and investing globally in markets with long-term growth potential, Prosus builds leading consumer internet companies that empower people and enrich communities.