Udaan valuation dives to $1.8 billion in down round

economictimes.indiatimes.com:

Udaan’s valuation has fallen by nearly half to around $1.8 billion in a down round, marking one of the most precipitous drops for a startup that has raised over $1 billion, people aware of the matter said.

Bengaluru-based Udaan was last valued at $3.2 billion following a funding round in January 2021.

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Udaan closed a $340 million financing last December by largely converting debt notes into equity. The round also included a fresh equity infusion. It did not disclose the valuation. Udaan counts China’s Tencent, DST Global among its top investors.

It’s a structured transaction in which first the debt was converted and then fresh equity. The new valuation would be around $1.8 billion — that’s how it’s priced now, according to three people aware of the details.

A spokesperson for Udaan declined to comment.

Udaan is now the second-largest startup — after online pharmacy PharmEasy — to have raised fresh capital at a significantly lower valuation than its previous round, underlining the challenging funding environment for new economy firms.

A down round happens when the company has raised new capital at a lower valuation.

Also read | ETtech Explainer: What are down rounds and will they become the norm for Indian startups?

For startups like Byju’s — that has constantly seen markdowns by mutual fund investors — it is an indication of the current valuation by the investor. Byju’s value was recently marked down by 95% to $1 billion by BlackRock.

However, valuations can also be reassessed