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New Delhi/Bangalore: Snapdeal.com, one of India’s biggest online marketplaces, is in advanced talks to raise another large round of funding merely three months after it raised $133.77 million, much of it from eBay Inc.—an indication of the continued attractiveness of the Indian e-commerce market and the cash burn-intensive approach of companies such as Snapdeal to build market share at any cost.

Snapdeal, promoted by New Delhi-based Jasper Infotech Pvt. Ltd, is likely to announce the new funding within the next month, and at least one new investor will participate in this round, four people familiar with the matter said. None wanted to be identified.

Mint couldn’t ascertain the amount being raised. Repeated text messages and calls to Snapdeal’s chief executive officer Kunal Bahl remained unanswered.

Kumar Shiralagi, managing director at Kalaari Capital, one of the existing investors in the firm, said: “As a matter of policy, we do not comment on transactions."

Snapdeal started in 2010 as a daily deals platform, selling coupons to groups of customers (similar to Groupon model), but converted to a marketplace in late 2011—first offering services and then adding a wide range of products including apparel, books and electronics through the third-party merchants.

A marketplace provides a selling and technology platform to other sellers. Indian law doesn’t allow foreign direct investment (FDI) in e-commerce but allows it in marketplaces. This has prompted several Indian companies including Flipkart India Pvt. Ltd, to move to a marketplace model.

Bahl had said in an interview with Mint in January 2014 that Snapdeal would generate gross sales (value of goods sold on the sites) of over $1 billion in the current financial year. The site gets to keep a cut of that $1 billion.

The company is in discussions with several financial investors like Azim Premji’s personal investment arm Premji Invest and Singapore’s sovereign investment fund Temasek Holdings, two of the persons cited above said. eBay is also likely to participate in the latest round of funding into Snapdeal, they added.

A spokesperson for eBay India declined comment.

In February, the San Jose, California-based eBay led a fund infusion of $133.7 million into Jasper Infotech. In April 2013, eBay led an investment of $50 million into the company. Entrust Group Inc and US-based individual investor Kenneth Glass were the new investors in the February round while venture capital firms Bessemer Venture Partners, Nexus Venture Partners, Intel Capital and Kalaari Capital committed funding in both rounds.

Analysts saw eBay’s interest in Snapdeal as an attempt by the company to forge a meaningful presence in a country where it has struggled despite being an early mover and where its global rival Amazon.com Inc. is expanding rapidly. The heightened competition from Amazon, which entered India last June, and Flipkart, powered by two rounds of funding, totalling $360 million last year, have raised stakes in India’s e-commerce market, with other rivals having to raise huge amounts of money to stay in the race.

Much of the fund-rasing in the space is a result of “Amazon’s aggressiveness" which is “the catalyst" of fund-raising efforts “for Indian e-commerce companies like Flipkart, Jabong and Snapdeal," said Katyayan Gupta, an analyst with Forrester Research.

Flipkart, Snapdeal, Myntra and Jabong, all of which raised between $50 million (around 300 crore) and $360 million in the past year, are stepping up spending on marketing, operations and promotions.

India’s e-commerce market, exluding travel services and tickets, is worth $3.1 billion and is estimated to grow to $22 billion in five years, according to CLSA’s November 2013 report.

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