Snapdeal, the distant third in the Indian ecommerce market is looking to raise fresh funds, according to reports. Buzz is that the etailer is in the middle of fund negotiation with its existing investor SoftBank Group.
It’s worth noting that Snapdeal would raise funds at a lower valuation of $3-4 billion, compared to the last year’s valuation of $6.5 billion. Softbank had devalued Snapdeal in November 2016.
Although, the online marketplace has denied that they are in the market looking for money. The company spokesperson said,
“We are well capitalized and we are not engaged in any active financing discussions.”
Down-round funding?
Snapdeal’s FY 2015-16 losses increased by 125% to touch Rs 2,960 crore. While most ecommerce biggies, be it Amazon or Flipkart are reeling under heavy losses, but they have at least something going for them.
But in the case of Snapdeal, the etailer is way behind in the ecommerce race and has lost considerable amount of market share to American ecommerce giant Amazon and Indian player Shopclues. On top of it, the ecommerce investment market is going through a slowdown. Investors are a little wary of putting money in companies that guzzle funds without giving healthy returns.
Maybe that’s why Snapdeal had to decrease its value. The Kunal Bahl-led company is also looking to raise money from other existing investors such as Kalaari Capital, Foxconn Technology Group, Nexus Venture Partners, and Alibaba Group.
According to reports, the online marketplace is also considering selling a part of its digital payments arm Freecharge.
In terms of finances, rival Flipkart is also not in a good place. The Bansals-led company has been trying to get capital for a long time with no luck. Constant devaluations are also making matters worse for Flipkart.
Only Amazon has sufficient funds, thanks to its rich parent company. But in terms of revenue and market share, Flipkart and Amazon lead the ecommerce market, whereas Snapdeal makes only brief appearances.
Would fresh funds help Snapdeal? Or money is not the real issue? We hope founder Kunal Bahl has the answers.
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