Shadowfax seeks new investors for funding

“The potential investors have asked Shadowfax to rebalance its order book from online retailer Meesho before it proceeds with any fundraising plan,” one of the three people said, requesting anonymity.

The social commerce company contributes almost 45-50% to Shadowfax’s revenue. “The investment round from A91 Partners has been put on hold, and the exclusivity period has ended,” he added.

Shadowfax is looking to raise up to $75 million from new and existing investors, valuing the company at $450-500 million, the second person said, also requesting anonymity.

The company has so far raised nearly $120 million from investors such as Eight Roads Ventures, US investment firm NGP Capital, Qualcomm Ventures and Mirae Asset Naver Fund and Flipkart.

Founded in 2015 by Abhishek Bansal, Vaibhav Khandelwal and Praharsh Chandra, Shadowfax offers logistics services to online-first brands.

The company offers 30-minute delivery to quick commerce, pharmacy and food delivery companies, besides handling less time-bound logistics for e-commerce brands.

In an emailed response to detailed queries from Mint, Abhishek Bansal, co-founder, Shadowfax declined to comment. According to the third person in the know, the company has grown more than 30% in the last quarter, and hence the management and founders are rethinking the valuations being offered when the round was launched.

“Shadowfax is now engaging with other investors to see if it can get better valuation owing to the fact that the business is going to be Ebitda positive next quarter (Jan-March 2023),” the third person said.

Shadowfax has a base of 125,000 monthly transacting delivery partners fulfilling more than 15 lakh orders daily across over 1100 cities and towns.

The company serves over 50,000 merchants through intracity and intercity services. At present, the company serves more than 170 D2C brands, which include some names such as McDonald’s, KFC, Apollo24*7, BigBasket, Decathlon, Ajio, Flipkart, Myntra, Hopscotch, Zomato, Swiggy, Meesho, and Pharmeasy, among others.

In an interview in November, the company’s co-founder and chief business officer, Praharsh Chandra, said that it is close to achieving Ebitda (earnings before interest, taxes, depreciation and amortization) profitability by the end of the financial year 2023 while continuing on its domestic expansion plans.

In FY22, Shadowfax reported its loss widened to ₹176 crore against ₹133 crore loss in the previous fiscal due to a significant rise in transport and employee benefits costs. The surge in expenses in the right areas, however, meant that the company was able to rake in more income, Mint reported last month.

In FY22, it more than doubled its operational revenue to ₹991 crore in FY22, against ₹464 crore in the previous fiscal, as per the company’s latest filing with Registrars of Companies (RoC). Its sole source of operating revenue is from logistics services.

In October, Shadowfax partnered with Shiprocket to facilitate same-day and next-day deliveries for direct-to-consumer (D2C) brands. “We entered an express delivery partnership with Shiprocket, and our business has grown almost three times since the initiation,” Chandra had said.

India’s logistics sector is poised to grow at more than 8% CAGR over the next five years, a report by Mordor Intelligence shows. As per India Brand Equity Foundation, India’s logistics are estimated to account for about 14.4% of GDP. More than 22 million people rely on it for their income.