India-based online marketplace Snapdeal has raised $500m in funding from e-commerce group Alibaba, contract manufacturer Foxconn and telecommunications firm SoftBank, Re/code reported yesterday, signifying the increasing international interest in the country’s e-commerce sector.
Snapdeal’s valuation in the round was not disclosed, but a Wall Street Journal report in March stated it planned to raise almost $1bn this year at a $5bn valuation. The company has not confirmed the funding, and a spokesperson told the Economic Times the article, which cited multiple undisclosed sources, was speculation.
The round has increased Snapdeal’s total funding to more than $1.5bn since it was founded in 2010, initially as a daily deals service. SoftBank paid $627m in October 2014 for a 30% stake in the company, just over a year after it reportedly invested $75m.
Other investors in Snapdeal include software provider Myriad, which invested in a $100m round in May 2014 that also featured Tybourne, PremjiInvest, BlackRock and Temasek.
Intel Capital, the corporate venturing arm of semiconductor maker Intel, e-commerce company eBay, Ru-net and Saama Capital provided $75m of series D funding for Snapdeal in April 2013 before Intel Capital, eBay, Saama, Kalaari Capital, Nexus Venture Partners and Bessemer Venture Partners supplied an additional $134m in February 2014.
Snapdeal runs one of India’s largest online marketplaces, listing more than 12 million products across 500 categories.
The company is one of India’s three biggest e-commerce players, its main rivals being Flipkart, which raised $700m at a $15bn valuation last week, and US-based Amazon, which has reportedly put aside $5bn to grow its business in India.
However, Snapdeal is pursuing a different strategy to its competitors, CEO Kunal Bahl told Re/code in April this year. Whereas Flipkart and Amazon are concentrating on physical products, Snapdeal is aiming to expand into a more diversified commerce service that could eventually encompass financial services, education, utilities and healthcare, as well as a larger range of physical goods.
To this end, the company has embarked on an aggressive acquisition spree in 2015, buying mobile charging service FreeCharge and credit marketplace RupeePower, as well as upmarket e-commerce subscription service Exclusively and mobile commerce platform MartMobi in a bid to boost its mobile offering.
The most interesting factor in the funding would however appear to be the identity of the investors, all of which are headquartered outside of India. SoftBank has already built up a sizeable portfolio of Indian e-commerce offerings that includes taxi hailing service Ola, property listings site Housing.com and, as of today, room rental marketplace Oyo.
Reports in May suggested Taiwan-based Foxconn also intends to ramp up its Indian corporate venturing activity as part of a $20bn investment initiative in the country. SoftBank, Foxconn and Alibaba are partnering on consumer robotics manufacturing, while SoftBank remains a substantial shareholder in Alibaba.
The three are used to dealing with each other but it is the presence of China-based Alibaba in the round that is perhaps most telling.
Alibaba and its domestic competitors in the online commerce space, Baidu and Tencent, are already playing out their own diversity war, and the Chinese firm is in a prime position to advise Snapdeal on strategy while at the same time boosting an India-based investment portfolio that already includes mobile payment platform Paytm, and which could also soon include smartphone maker Micromax.
Large US players in the internet and e-commerce space, such as Google, Amazon and Facebook, all have plans to invest heavily in big developing markets such as India, but it appears to be the large Asian firms that are investing heavily in corporate venturing in the region, and who may well be in pole position to take advantage in the long run.