Waycool asks for more time to repay debt as it looks to turn a profit

The move comes shortly after the company raised $30 million through convertible notes in an internal funding round, with most of its existing investors participating, two people familiar with the matter told Mint. 

The company owes nearly ₹100 crore to lenders, one of them said.

In 2022, Waycool had raised about ₹95 crore through a combination of debt and equity from venture-debt firm Trifecta Capital, according to an Entrackr report. The company also raised ₹195 crore to ₹200 crore from venture-debt firm Alteria Capital.

Waycool has been regular with repayments, but the startup is now requesting an extension of approximately one year on its repayment schedule as it aims to achieve profitability within the next few months, one of the people cited above said, adding that the recent funding round is expected to significantly mitigate the company’s liquidity challenges. 

Waycool has already repaid the majority of the principal loan amount and intends to clear the remaining debt at a higher interest rate, this person said. 

Alteria Capital and Trifecta Capital were not immediately available for comments.

“The company is close to Ebitda profitability, having reduced its Ebitda burn by 80% in the past year. Our fresh business turned profitable in March 2024 and other businesses will turn profitable in the next few months.” Waycool said in a statement to Mint. “Our lenders have been very supportive of the effort [and] have extended our repayment tenure. With this, the repayment can be done with cash accruals after profitability.”

The startup confirmed the fundraise but denied that its valuation had been marked down. The company, which expects to raise more than $40 million in this round, said, “Several family offices have also participated and more are expected to join. This is not a priced round but a convertible one, based on the next-round valuation.”

The company last raised funds in June 2022 at a valuation of $700 million. It counts Lightbox, Lightrock, Redwood Equity Partners and Innoven Capital among its investors, and has also secured venture debt from Trifecta Capital and Alteria Capital.

In FY22, Waycool posted a loss of ₹361 crore, from ₹149 crore the previous year. However, its revenue more than doubled to ₹931 crore in the same period.

Waycool has been on a cost-cutting spree over the past year, in which it has laid off employees, redrawn its supply-chain strategy and cut back on its expansion plans, according to media reports.

India’s agritech sector is thus yet to see its first unicorn (a private company with a billion-dollar valuation) despite the startup funding boom during and just after the pandemic.

The sector received $1.28 billion in venture capital funding in FY22, according to a September 2023 report by FSG, a consulting firm. But in FY23, investments plummeted by 45% to $706 million. With VC funding drying up, several agritech startups have been forced to pivot their business models and focus on becoming more efficient.

Waycool, founded by Karthik Jayaraman and Sanjay Dasari, started out connecting farmers with retailers and institutional buyers but has since reinvented itself as a product company with its own brands of staples and fresh produce.

The startup began its journey in 2015, seeing an opportunity to make the supply chain efficient and responsive to demand. That meant aggregating produce from small farms and delivering it to retailers and institutional buyers like modern retail, reducing the number of middlemen.

It experimented with several models – including running its own retail outlets until 2017 and supplying to hotels and restaurants — but is now focused on supplying kirana stores. WayCool also launched its own brand of staples and a separate dairy brand. It currently supplies to 67,000 retailers across five states in southern India, and competes with DeHaat and Ninjacart.

“With the launch of each brand, the margin profile improved for us,” Karthik Jayaraman, co-founder and managing director at WayCool, told Mint in February. “This was our lesson learnt. With all true intent we went on to make the supply chain more efficient. But we were not rewarded for providing that service. So, we had to think like a product company with offerings customised to consumers’ needs,” Jayaraman added.