In a first, private equity firm General Atlantic (GA) will invest in an Indian e-commerce firm-Snapdeal. After talks with Amazon-clone Flipkart snapped, GA is in talks with Delhi-based daily couponing site Snapdeal to invest close to Rs 550 crore in the company, an Economic Times report said.
Snapdeal, founded in 2010 by Kunal Bahl, a Wharton Business School graduate was initially modeled like Groupon in the US. However, since then the company has changed its offerings to include offering products thereby making it a full-fledged e-commerce company. Doubts of the coupon model succeeding could have prompted the decision.
The VC investments in e-commerce in the last year totalled to $165 million dollars led by Zovi.com, Yebhi.com and Dealsandyou.com, data from Venture Intelligence, a research service focused on Private Equity & M&A showed.
The slew of e-commerce firms in the market have been accused of burning cash in customer acquisition and marketing and very few offer exit options for investors. A recent Times of India report suggested that Flipkart will be soon running out of money and may need $150 million for growth.
But that is not stopping investors from pouring more dollars into e-tailing. “E-commerce has experienced stupendous growth in recent times in India and we do not see this growth slowing down anytime in the near future.
Scale is certainly necessary to survive in this business and India presents that scale to anyone who is serious about this business. While online travel grew rapidly in the last 5 years, the next 5 years will see e-tailing to outpace online travel market in India,” said Praveen Bhadada, head market-expansion at Zinnov Management Consulting in a report on E-commerce in India.