[Funding alert] FMCG distribution platform Dropshop raises Rs 9.3 Cr in pre-Series A led by Inflection Point Ventures

Bengaluru-based one-stop distribution platform for FMCG brands Dropshop on Monday announced that it has raised Rs 9.3 crore in a pre-Series A round led by Inflection Point Ventures. Existing investors Axilor Ventures and The Chennai Angels also participated in the round, with 42.vc joining the round via AngelList.

The funds raised will be used for strengthening the product and scaling up of operations for handling more FMCG brands and enter new markets like Chennai and Hyderabad.

Founded in May 2019 by Udit Dhawan, Rohit Fernandes, and Ravi Teja, Dropshop is a full-stack platform for FMCG companies to digitise their last-mile distribution, sales, logistics, and credit to retailers.

Speaking about the fund raise, Udit Dhawan, Founder and 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.

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"We believe that the time is ripe for FMCG distribution to consolidate and evolve into retail execution where all stakeholders benefit from data and technology. 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. “

An untapped opportunity

Currently, Dropshop Network reaches 10,000+ retailers in Bangalore. It works with five of the top 10 FMCG companies in India including ITC, Marico, Reckitt Benckiser, and Godrej Consumer Products and 40+ small and localised brands. 

According to the startup, Dropshop clocks over 15,000 orders per month with Rs 4 crore GMV per month.

Commenting on the investment, Mitesh Shah, Co-Founder, Inflection Point Ventures stated, “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-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 new emerging area where we expect more startups to enter making it an attractive sector to invest in,” he added.

"With the help of technology, Dropshop is able to cover 90 percent of the region compared to 60 to 70 percent covered by the traditional distributors. This helps in optimising distribution costs and increase in sales for their customers. The whole idea of tapping into FMCG distribution and logistics segment got us interested in leading this round," said Jignesh Kenia, Lead Investor, IPV.