Shadowfax Technologies Ltd. Is In Talks To Raise $100 Million, Valuation Likely To Touch $350-400 Million

According to sources with knowledge of the situation, hyperlocal logistics startup Shadowfax is in discussions to raise $75 100 million in a mix of primary and secondary finance. The Mumbai-based investment fund A91 Partners is in talks to finance the major part. On the condition of anonymity, because the discussions are secret, they added that the deal is presently in the due diligence phase.

The early backer of Shadowfax, Eight Roads Ventures, which is backed by Fidelity, is expected to sell some of its holdings in the secondary share sale. According to sources, talks have taken place between the Canada Pension Plan Investment Board (CPPIB) and NewQuest Capital Partners, a fund that specialises in purchasing secondary stakes, to purchase the stake from Eight Roads.

If the purchase goes through, Bengaluru-based Shadowfax, which is backed by homegrown ecommerce powerhouse Flipkart, will probably be valued at $350-$400 million.

A91 is expected to close the primary finance while the due diligence is still proceeding. The secondary sale is still in progress, so the round's specifics could alter, according to a source familiar with the fundraising.

Flipkart, which is owned by Walmart, is expected to take part as well. In 2019, Flipkart led a $60 million investment round for the logistics company as an investor. Shadowfax's sales increased from Rs 323 crore in FY20 to Rs 464 crore in FY21, according to its annual reports.

According to one source, "the company is currently clocking around Rs 110 crore in monthly sales with (cash) burn of Rs 4 crore, demonstrating sustained growth with a reduction in losses...

In the midst of a hyperlocal startup boom, Bansal and Vaibhav Khandelwal founded Shadowfax in 2015 as a hyperlocal delivery service. Since then, Shadowfax has expanded its clientele to include more e-commerce enterprises like Meesho.

According to an investor in the e-commerce sector who wished to remain unnamed, "Ecommerce business is becoming increasingly crucial for Shadowfax as food-delivery platforms like Swiggy are striving to handle the hyperlocal difficulties in-house and the acquisition of Rapido is a testament to that."

In addition to last-mile delivery, first-mile seller pickup, middle-mile product transit, and customer return pick-up, Shadowfax also offer a number of logistics services. Following the profitable initial public offering (IPO) of logistics giant Delhivery in May, the company has secured new funding. At the low end of the market, Meesho and Shopsy from Flipkart are tough competitors.

According to Prahlad Tanwar, global head of the logistics sector at KPMG, Over the next five years, it is predicted that the Indian e-commerce market will expand by 35 to 40%. By 2026, the industry is projected to generate 23-24 million shipments daily, up from the current average of 8 million.  Even though there are just a few well-established participants in the industry, such as Delhivery, Ecom Express, and Xpressbees, e-commerce logistics is a very exciting and quickly expanding field to be in.