With its own coffers running almost dry, with cobwebs, Snapdeal is continuously pouring capital to keep its digital payments service FreeCharge up and running. Post departure of former CEO Govind Rajan, it had been operating without any chief executive for well over a month. But, Snapdeal is now looking to end these woes by committing another $20 million to the business, in addition to appointment of Snapdeal’s every exec position man — Jason Kothari — as FreeCharges’s new Chief Executive Officer.
Jason Kothari, who was brought in from Housing.com about a couple months ago, has been shouldered more than a handful of responsibilities in a short duration of time. First, he had been appointed as Snapdeal’s chief strategy and investment officer, but then he was also tasked with the management of FreeCharge’s operations. And now the complete burden of building the digital payments major has been handed over to this newcomer of the Sanpdeal family.
Jason Kothari, Chief Executive Officer, FreeCharge & Chief Strategy & Investment Officer, Snapdeal, said,
The digital payments space in India is forecasted to be over $ 1 trillion by 2025. I’m excited to join the talented team at FreeCharge at such a high-growth and dynamic time in the industry and expect FreeCharge to continue to play a key role in this digital payments revolution.
In addition to taking on the role of the CEO at Freecharge, Jason Kothari will also continue his leadership role as Chief Strategy and Investment Officer at Snapdeal. He will also join the Board of Directors of FreeCharge, which shows the amount of trust Snapdeal’s co-founders are ready to place on their latest hire — amid the funding crunch. Especially, when they’re trying to cut losses and revive growth in search of profitability. The co-founders have even resorted to giving up their compensations to save the sinking ship.
Commenting on the appointment, Kunal Bahl, Co-founder & CEO, Snapdeal, said,
As India moves towards a cashless and digital economy, we are certain that FreeCharge will play a pivotal role in the transition. We remain committed to the success and vision of FreeCharge. Jason is a strong, strategic and versatile business leader & entrepreneur who has already been the CEO of two successful companies. We are delighted to announce his leadership role at FreeCharge.
Apart from the announcement of its new CEO, the company has also committed to invested $20 million in the company to accelerate innovations and growth. However, it remains to be seen how the company plans to invest, since Snapdeal itself is going through cash-crush, and seems to be on the verge of shutting down.
While the govt’s demonetization drive has definitely caused a massive uptick in Freecharge’s user base and transaction numbers, it still faces a very tough compitition from Paytm — the market leader in the digital wallet and mobile payments space in the country.
Prior to today’s investment, Snapdeal parent Jasper Infotech had pumped a whopping $58 million (approx ₹390 crores) into the company. Other investors who’ve backed FreeCharge include Sequoia Capital, Sofina, and Valiant Capital Partners among others.
The announcement of infusing $20 million in Freecharge confirms that the e-commerce giant is not planning to sell their payments platform anytime soon. Earlier, it was reported that Snapdeal was in talks with PayPal to sell-off Freecharge for around $500 million, in order to keep Snapdeal running amid its massive cash-crunch, when none of its investors are ready to pour-in money.
Since Snapdeal has been plagued with an extensive cash crunch, it has been taking several cost-cutting as well as revenue addition measures, such as an increase in seller prices on their platform. It decided to let-go 30% of its workforce, resulting in the lay-off of over 600 employees.
Additional reporting by Anmol Sachdeva