B2B e-commerce startup Udaan has raised $340 million in a Series E funding round led by UK-based M&G and with participation from existing investors such as Lightspeed Venture Partners and DST Global.

The round included a combination of fresh equity investment and conversion of existing debt (convertible notes) into equity.

The company plans to use the funds to improve customer experience, strengthen market penetration, form strategic vendor partnerships, and reinforce long-term supply-chain and credit capabilities.

With over three million retailers and thousands of sellers on its platform, Udaan now wants to focus on building a regional cluster-led operating organisation to improve execution, ownership and accountability. “Over the last 12 months, Udaan has seen strong and steady validation of its multi-category cluster-anchored business strategy,” the company said.

The Bengaluru-based firm, which began operations in 2016, was co-founded by former Flipkart executives Sujeet Kumar, Amod Malviya and Vaibhav Gupta. It is backed by Microsoft, Tencent and investors such as Trifecta Capital.

While the company has not shared details about its valuation, as per Tracxn the figure stands at $3.1 billion. In FY23, the company’s revenue from operations declined by 43% to Rs 5,609.3 crore from Rs 9,897.3 crore in FY22. Losses also shrank by about 34% to Rs 2,076 crore from Rs 3,132 crore a year ago.

Its peer, social e-commerce startup DealShare, recently shut down its B2B division and laid off 130 employees, planning to now focus on B2C operations.