'Team's well-being top priority': Struggling Snapdeal assures employees
In the third placatory communication to employees in two months, Snapdeal founders Kunal Bahl and Rohit Bansal said their well-being is "top priority". Despite mass layoffs, Snapdeal conducted appraisals for 2017; however, employees claimed the decisions on the promised "higher" increments had been delayed. Snapdeal is reportedly in talks with Flipkart for a potential sale, as its largest investor, SoftBank, mulls selling the firm.
Snapdeal was launched in 2010 on the model of Groupon, the world's largest online deals seller. The revenues of the company had been growing at 100%, selling unused inventories. It took a 35% cut for any deal from the merchant. Vinod Dham, a well-known silicon valley investor, along with Bazee.com co-founder, Suvir Sujan, had invested $12 million in the company.
In 2011, Shiv Nagar, a village in UP, was renamed as Snapdeal. com nagar after the company installed 15 hand pumps in the village.
Japan based internet and telecom giant SoftBank invested $627 million in Snapdeal. The announcement came after SoftBank told about its plans to invest $10 billion in India, marking the country as 'its top priority'. Snapdeal planned to use the amount to make acquisitions in the near-future. Snapdeal was also planning to open a R&D centre in Bangalore.
Snapdeal announced the buyout of FreeCharge for $400 million. This is the largest acquisition by an Indian company. This overtakes Flipkart's $370 million acquisition of Myntra last year. The combined entity will now have over 1 million mobile based transactions every day. FreeCharge's user base in more than 20 million.
Snapdeal raised $500 million in fresh funds from Chinese e-commerce firm Alibaba Group, Foxconn Technology Group and existing investor SoftBank Group. This transaction would value Snapdeal at more than $5 billion. FIH Mobile, a unit of Taiwan's Foxconn said it was buying a 4.27% stake for $200 million. On the other hand, eBay - an existing investor, sold a portion of its stake.
Snapdeal has raised another $200 million or Rs.1,367.6 crore, just seven months after it raised $500 million. Ontario Teachers' Pension Plan, Brother Fortune Apparel and Iron Pillar were the major investors in this current round of funding. With the latest round of funding the company has been valued above $6.5 billion, making it the second most valued ecommerce company in India after Flipkart.
According to reports, Indian e-commerce firm Snapdeal is letting go 600 of its employees in order to cut back on spending. Both the founders, Kunal Bahl and Rohit Bansal have decided to take a 100% paycut. Along with its payments subsidiary FreeCharge, Snapdeal has a total Rs.1,400-1,600 crore in the bank which is exhaustible in a matter of 8-10 months' time.
SoftBank Group Corp, Kalaari Capital and Nexus Venture Partners, who invested in Snapdeal are preparing to sell the company to one of its competitors- either Flipkart or Paytm. SoftBank also sought part of the stake owned by Kalaari and Nexus, who are seeking $100 million for their share. Sources said the deal is being rushed due to paucity of funds at Snapdeal.