Snapdeal, the e-commerce startup currently going through a tough bout, may be on the track of getting what it needs the most at this point — fresh capital. As per a report from Economic Times, the homegrown e-commerce company is in talks with SoftBank to raise around $300 million.
While the company is just a few steps closer to securing this funding round, SoftBank Corp. — the largest shareholder in the company, cloud drag its valuation down to under $3 billion. Also, it is said that the investment could be offered in tranches of $100-150 million.
As per the people aware of the development, Jasper Infotech, the parent company of Snapdeal and SoftBank have been going back and forth for the last two months on crucial terms of the deal, including on the investment size and the valuation. They further said that Jasper’s board has held talks with SoftBank for raising funds at a valuation of $1.5-2.5 billion.
SoftBank currently owns about 33% stake in Snapdeal’s parent company. The current investment round in Jasper could see the Masayoshi Son-led technology, telecom, and internet-focused investor raise its stake in the company to about 40%.
If the transaction goes through at a lower valuation, it would be the latest instance of a top-tier Indian Internet company’s valuation taking a hit. Recently, cab-hailing startup Ola raised capital from SoftBank at a 40% drop in valuation. Flipkart’s valuation has also been cut down several times in the past one year.
Gurgaon-based Jasper was last valued at $6.5 billion when it raised $200 million in funding led by Canada’s Ontario Teachers’ Pension Plan in February 2016. It was valued below $3 billion in late 2014 to early 2015 during stake sales by shareholders to other investors.
The company is currently going through very hard times and has now adopted a lean business model in search of profitability in the next two years. Recently, it laid-off nearly 600 employees and the founders decided to take 100 percent salary cuts. Even the sellers on its platform seem to have lost trust in the company. Online sellers of Snapdeal have urged commerce minister Nirmala Sitharaman to intervene in the Snapdeal matter and ensure that the troubled e-commerce company paid their dues.
Snapdeal, the country’s third-largest online marketplace after Flipkart and Amazon India, has been beset by slowing growth, mounting losses, falling market share, and an exodus of senior executives.
