The list of crises at online marketplace Snapdeal seems never-ending. After massive layoffs, mounting losses and a serious fund crunch, media reports now suggest an internal feud among the company’s investors that has delayed the funding it badly needs and, possibly, even affected its potential sale.
The Mint newspaper reported, citing people it didn’t name, that the conflict was between Kalaari Capital and Nexus Venture Partners (early investors in the Jasper Infotech Pvt. Ltd-run e-commerce firm) on one side, and the firm’s biggest investor and shareholder SoftBank on the other. The clash has already cost Snapdeal at least two funding rounds over the last six months, the report added.
Over the past few months, the report said, the Japanese Internet conglomerate has offered to invest in the e-commerce firm and its mobile wallet subsidiary FreeCharge. But the proposed deal’s valuation was less than half of the $6.5-billion valuation that Snapdeal racked up in its last funding round in February 2016. Kalaari and Nexus rejected the offer “as the valuation drop would have led to a significant increase in SoftBank’s stake and a corresponding slide in their ownership”, it added.
The report also said that Kalaari and Nexus asked SoftBank to buy part of their stakes too, but SoftBank preferred a direct investment.
In the second half of last year, eBay Inc, a minority investor in Snapdeal, had offered to sell eBay India to Snapdeal and put extra money into the company, but that offer was also rejected by the company’s board over differences in proposed valuation.
“There are two different things SoftBank is doing. On one hand, it is telling Snapdeal that it has confidence in the founders and their plans; on the other, it is looking for a quick exit. We have to see what finally happens,” a person close to the development told Business Standard. Quoting anonymous sources, the paper also said that Snapdeal was planning to launch an initial public offering by 2019.
A SoftBank spokesperson said in response to an email fromVCCircle: “not commenting on this (report).”
Emails sent to Nexus and Snapdeal didn’t elicit a response at the time of publishing this report.
Messages sent to Sameer Brij Verma, venture capitalist at Nexus, remain unanswered. An email sent to Vani Kola, managing director at Kalaari, got an automatic reply saying she was “away on vacation…with limited access to e-mails and phone”.
In August last year, VCCircle had reported that Snapdeal was in talks with rivals Flipkart and Amazon for a merger.
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