Will $17.5M act as a breather for Snapdeal?

According to a filing with the Registrar of Companies, Ministry of Corporate Affairs, Jasper Infotech, Indian ecommerce company Snapdeal’s parent company raised $14.9 million from Nexus Ventures in an emergency funding round. Snapdeal’s founders Kunal Bahl and Rohit Bansal also invested another $2.6 million bringing the total investment to $17.5 million (INR 113 crore). This news comes at a time when there might be a possible merger between Snapdeal and Flipkart mediated by Japanese Internet giant SoftBank. Snapdeal has been in the news for the last couple of months due to speculations of acquisition and mass lay offs. According to a Mint report, the company has a cash reserve, which it was going to use to keep its operations up and running for the next 3-4 months. As of December last year, the company had about $100 million in its bank as a reserve to sustain operations. But the new funding has given Snapdeal an extended breather. According to another report by the Hindu Business Line, Nexus Ventures has not been in favor of the Flipkart-Snapdeal merger and has opposed the deal. However, it seems that the fresh funding will give a pump to the withering company as there were speculations that Flipkart has already signed the term-sheet for the acquisition of Snapdeal. The regulatory filing claims that the shares were allotted to the company on the 10th of March 2017. Both the founders were given 1300 Series J preference shares and Nexus Ventures was given 14, 810 preference shares. Snapdeal was valued at about $6.5 billion earlier this year in February. Post SoftBank writing off $1 billion on valuation of its investment in Snapdeal, the sale to Flipkart might see itself valued at around $1 billion.