VCs keep the faith in Snapdeal

"We are still in the early days of e-commerce: people start with low value items and move up the food chain. Unless, like Bluestone, you have a product that is high value and high margin it does not make sense in India right now," says Ash Lilani, Saama's managing partner and co-founder.

Bluestone focuses on quality and user experience - it has even embraced the online-to-offline model like certain vertical players in China's e-commerce space - but Lilani reckons India is still 2-3 years away from wider-scale implementation of this approach.

"Horizontal plays are working better right now," he says, pointing to Saama's continued support of Snapdeal, the online marketplace that recently received $133.8 million in Series D funding. The round was led by eBay, with existing investors such as Saama, Intel Capital, Bessemer Venture Partners, Nexus Venture Partners and Kalaari Capital also participating.

"Snapdeal is an agnostic marketplace and not pursuing any particular category," adds Mahesh Vaidya, a director at Intel Capital, endorsing the horizontal approach. "It is adding new categories all the time."

These categories now number 500 and include about 4 million individual products. Snapdeal has a registered user base of approximately 20 million and expects gross merchandise value (GMV) of nearly $500 million in the current financial year, rising to $1 billion the following year. It aspires to be profitable the year after that.

Snapdeal's latest capital injection comes less than a year after the previous round, worth $50 million, which was also led by eBay, joined by fellow newcomers Saama, Intel Capital, ru-Net and Recruit Holdings. Early backers Bessemer, Nexus and Kalaari were present too. Lilani says the size and speed of the Series D is testament to the rapid growth India's e-commerce market has experienced in the interim, with Snapdeal's GMV approaching six times what it was when Saama first agreed to invest.

The most recent round is expected to be enough to put the company in a position for a US IPO, which is slated to happen within 24 months.

Snapdeal continues to invest in technology to support transactions. In the last year an online payment gateway, inventory management tools and an improved logistics platform have been introduced. A mobile phone app that enables sellers to track shipments is currently in the works.

For Vaidya, this justifies both Snapdeal's marketplace approach - as a facilitator of sales rather than a holder of inventory - and Intel Capital's investment thesis. "We look for companies that allow our channel partners to gravitate towards online transactions in an efficient a manner as possible." he says.

 

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• Topics
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