Bengaluru/New Delhi: The crisis at online marketplace Snapdeal, which is up for sale after struggling to raise funds, is the culmination of a series of errors by its co-founders and its board, raising questions about the roles of all parties involved.
Venture capital firms Kalaari Capital and Nexus Venture Partners, both of which have representatives on Snapdeal’s board, are in a tussle with SoftBank Group Corp., which has two board seats, over the company’s valuation in a potential sale.
The other board members are Snapdeal co-founders Kunal Bahl and Rohit Bansal, and Bharti Group veteran Akhil Kumar Gupta, an independent director.
The boardroom battle came out in the open on 31 March when Mint reported that Nexus and Kalaari disagree with SoftBank over Snapdeal’s valuation in a funding round or a sale.
The board members, however, have been aware for several months that a fall in Snapdeal’s valuation would lead to such differences, two people familiar with the matter said.
Yet, the board allowed Snapdeal to keep spending, leading to a cash crunch.
Since September, when Snapdeal launched a Rs200 crore campaign to transform its image, it has held at least three heavily advertised sale events to try and compete with larger rivals Flipkart and Amazon India.
In July 2016, Snapdeal, which had raised some $1.4 billion since October 2014, still had about $500 million left.
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