Thursday 8 September 2016

Despite frequent devaluations & hesitant investors, smaller ecommerce companies doing better at raising funds

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Ecommerce companies are reportedly raising funds from various sources. eShakti Pvt. Ltd, a women’s apparel company, has collected Rs. 9 crores from two different investors. Likewise, Lenskart, the online lens store has raised a sum from Azim Premji through his personal investment vehicle, PremjiInvest.
Peyush Bansal, the company’s founder and CEO asserted that the move was not to raise funds per say, but only to allow Premji to join as a stakeholder. Bansal said,
“This (round of funding) is just to bring Premji on board. It is not about the money or the valuation. PremjiInvest has deep expertise in building long-term, sustainable businesses.”

Cooling showers in the desert

In the recent months, finance has become a bone of contention between investors and ecommerce companies. The former are insisting on substantial results of their investment, and are going so far as to devalue companies. Flipkart has been facing a series of devaluations from its investors. Jabong has also been devalued prior to the Myntra takeover.
The ecommerce industry in general has been going through ill health. Funds have been consistently drying up and new government regulations have not exactly helped the situation. In such arid climate comes the news of funding for the two ecommerce companies. Is it about the mode of operations then?
EShakti runs a customised facility similar to a boutique, where the apparel is made based on the customer’s order. The company does not stock garments. The current capital has reportedly come from Infina Finance Pvt. Ltd and Polaris Banyan Holding. Online sellers ought to consider moving to smaller marketplaces, as the money seems to be slowly moving to that side.

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