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Snapdeal Founders Pocketed $24 Mn In 2015; So Much For Salary Cuts

Snapdeal Founders Pocketed $24 Mn In 2015; So Much For Salary Cuts

India’s ecommerce giant Snapdeal is in the news again. This time, as per a report by Financial Express, the founders of online marketplace, Kunal Bahl and Rohit Bansal sold 11,462 shares in their personal capacity in 2015 to Ontario Teachers’ Pension Plan. The two sold 5,731 shares each, subsequently raising $24.4 Mn through the transaction.

The firm was valued at around $6.5 Bn in 2015, post its fundraise of $500 Mn from Alibaba Group, Foxconn Technology Group and Softbank.

Both the founders sold 5731 shares respectively, earning individual profits of around $12 Mn each. As per filings mentioned in the FE report, a few other investors had also sold their shares around that time.

As per recent RoC filings of Jaspers Infotech Pvt. Ltd (parent company of Snapdeal), the loss for FY2016 was about $495 Mn (INR 3,315.5 Cr) as compared to $198.2 Mn (INR 1,328 Cr) in 2015.

Founded in February 2010, by Kunal Bahl along with Rohit Bansal, Snapdeal claims to offer over 65 Mn products across 1000+ categories. Currently, it claims to have more than 300K sellers on its platform. As per the same report, the Jasper-run company is looking to raise funds again, but its current valuation is pegged at somewhere around $4 Bn.

In February this year, the company fired about 600 people from its workforce, in its exercise of cost-cutting. In an email sent by the founders to their staff, they also conveyed their intent of taking a 100% pay cut. Snapdeal also stopped the incentive programme for customers that it previously launched through affiliates.

The falling unicorn has till date raised about $1.76 Bn funding in 12 rounds. The most recent investment came in August 2016 from Luxembourg-based firm Clouse SA, that invested $21 Mn. This was a part of the same round where Snapdeal raised $200 Mn funding in February 2016. Prior to that round, it had raised $500 Mn from Alibaba Group, Foxconn Technology Group and Softbank. In February 22014, it had secured $133 Mn from Ebay and existing investors, including Bessemer Venture Partners, Nexus Venture and Indo-US Venture Partners.

Snapdeal had acquired Freecharge for over $450 Mn through a mix of cash and equity in April 2015. In January 2017, it received $57.2 Mn (INR 390 Cr) from Jasper Infotech. In December, 2016 there was a buzz that Chinese ecommerce giant Alibaba was in talks to buy Snapdeal. Earlier in December 2016, it was reported that PayPal too was looking to buy a 25% stake in FreeCharge. However a day later, FreeCharge dismissed the reports.

Earlier last month, its CEO Govind Rajan resigned and was replaced by Jason Kothari, who was to oversee the business operations of FreeCharge as part of his overall responsibilities of portfolio management as the Chief Strategy and Investment Officer of Snapdeal.

Earlier, a group of online sellers asked the commerce minister Nirmala Sitharaman to intervene in the matter and safeguard their money that Snapdeal owed them, in the form of outstanding dues. Later, Nirmala Sitharaman, Union Minister of State, Commerce & Industry (I/C) intervened in the situation and stated that she will look into the matter and inquire into the vendors’ complaints of default payments by Snapdeal. The company came in hot waters again when reports surfaced that a group of merchants that represents small online sellers claimed that its members were still waiting for their dues to be cleared by Snapdeal. The online marketplace had allegedly not cleared the payments for eight months.

On the other hand, Snapdeal’s rival, homegrown ecommerce giant Flipkart is in talks with Microsoft Corp., eBay Inc., PayPal Holdings Inc. and Tencent Holdings, to raise about $1.5 Bn. It is also reportedly in talks with Google Capital for the ongoing round.