Frendy Raises $2Mn Funding From Auxano Capital, AT Capital Singapore, Others The capital raised in this bridge round will be utilized to expand tech offering, private label product portfolio and expansion of stores
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Frendy, which is building a digitally connected convenience store network for smaller towns & rural India has raised a bridge round of ₹16 crores ($2 M). The company's last funding round was in May 2022. Frendy's current round is led by Auxano Capital, AT Capital Singapore, Metara Ventures, founders of The Wellness Co, Priya Joseph, Rohan Jain and Rishabh Jain, Apurva Solapur family office and existing investor Desai Ventures. The firm may extend the round up to ₹24 crores via a follow-on rights issue.
Frendy was founded by Sameer Gandotra, Gowrav Vishwakarma and Harshad Joshi and claims to have achieved a revenue of ₹82 Crores in its FY23 which is its 2nd year of operations up from ₹40 Cr in FY22. It is based out of Ahmedabad and has a team of 100 professionals including its in-house technology team. The startup is currently operational in 40+ Tier 2-6 towns in Gujarat, serving 50,000 customers and over 4,500+ products.
The capital raised will be utilized to expand the tech offering, private label product portfolio and expansion of stores. "Frendy's experienced founders have consistently focussed on capital efficiency and measured growth and are forecasting to achieve an ARR ₹300 Crores in revenue and profitability in the next 24 months by focussing on growing in its current geographies and using density to build a strong cost moat," the company said in a statement.
Frendy's convenience store network for smaller towns + rural consists of Franchised Frendy Marts digitally connected to a cluster of Frendy Micro stores. Frendy Marts are modern self-serve store typically 500 -1000 sq. ft in size and offering 1,000 to 2,000 products. In addition to serving walk-in customers, the Marts also double up as a dark store for a cluster of digitally connected 30 to 50 Frendy's Micro stores in a 10 km radius. Micro stores consist of existing family-run micro kiranas and new home-based stores set up by housewives. Micro stores typically carry 100 SKUs, and the balance SKUs are digitally available on Frendy's app for customers to order with the assistance, trust & assurance of the Frendy micro store owner. The company says that a typical Mart Franchise costs 10 Lakhs+ to start & micro store franchisees require about INR 50,000.
Frendy has designed an omni channel and digitally networked hub & spoke convenience store model which is curated for India where 96% of retail stores are smaller than 500 sq. ft and 85% of these stores are micro in nature – doing less than INR 2 lakhs in monthly revenue. Frendy's model allows it to leverage existing micro-stores thus providing it a distribution model with the highest reach, trust & curation. Each micro store is a last-mile distribution point for a large & growing e-commerce offering and a whole range of digital services & products that can be strapped on. Frendy focuses on stores run by women who can be very strong influencers for its range of private label products & encourage digital shopping adoption of other women in the community.
"In value retail, density & cost is the strongest moats. Our mantra is to build profitable, sustainable, scalable model. The market is large, and we will scale when it's right. If you keep prices of essentials low, you customers trust you and you earn back via their entire basket spend in your store," said Joshi.
Speaking about its digital network, Vishwakarma, stated, "Tech is the backbone that allows the supply chain to work from the hubs to the spoke micro stores & the digital app used by customers. Our goal is to make the tech platform simple & frictionless for the stakeholder. Secondly to make retail processes more efficient with data-based demand forecasting, auto-replenishment, data-based pricing benchmarking. Finally, to use tech to empower our Franchisees to enhance their business with WhatsApp based community engagement & marketing tools. We enable the Mart & micro store franchisees to use AI-based tools to create & share marketing & merchandising collaterals that are at par with the large print ads taken out by the country's largest retailers".
While there are a few startup ventures focussed on franchised kiranas or grocery-based community group buying, Frendy's differentiators, it claims, are its unique micro store plug-in that gets it a very wide reach in smaller towns/rural. Second is its focus on private label which is now up to 250 SKU's and growing. Finally, there is an experienced management team with retail execution experience & scaling microentrepreneurs, it says.
Commenting on the company's progress & plans, Gandotra said "We spent the first 2 years to build out our micro store thesis and achieved very strong PMF. In our 2nd phase we are going asset & operations light with our Franchised Marts doubling up as a warehouse for our existing micro stores and in parallel have scaled down our Central warehouse. Our goal for the coming 12 months is to have 40 operational Marts and further build out our private label offering. We have now perfected our business model and will continue to grow with right unit economics and scale out the model to the rest of Gujarat & then into other states."