SoftBank Internet and Media Inc. (“SIMI”) and Snapdeal today announced definitive agreements under which the SoftBank Group will become the largest investor in Snapdeal, through a total investment of $627 million.
Snapdeal has raised close to $ 1 billion this calendar year. The latest round of funding is from Softbank, the globally renowned investor in internet companies which include the Alibaba Group. With an investment of US$ 627 million, Softbank is now the leading investor in Snapdeal.com. This is the largest investment made by a single investor in an e-commerce company in India. Other existing investors have also participated in this round with a significant undisclosed investment.
Earlier this year, the company raised $133.77 million (Feb 2014) as a result of a round led by eBay and $105 million (May 2014) as result of a financial round which saw participation from institutional investors - Temasek, Myriad, Tybourne, Blackrock Inc. and Premji Invest. Tata, Chairman Emeritus, Tata Sons - a renowned name in the Indian as well as global business circles, also made a personal investment into the company.
In order to further the growth Snapdeal has seen so far, the company will be making strategic investments in ramping up its efforts in Technology and Supply Chain Management. To strengthen its Technology efforts, the company will open innovation centres across the country. After Delhi, it has already opened its second innovation centre in Bangalore and plans to open innovation centres in cities like Hyderabad and Pune. The company will also double its technology team size to 1000 people by the end of the current financial year. To strengthen its Supply Chain efforts, the company also looks to expand its fulfilment centres to 30 cities. It currently has 40 fulfilment centres in 15 cities. With the vision to enable SMBs in India to do business online, Snapdeal aims to expand its merchant base to 1 million in the next 3 years. The setting up of fulfilment centres is in line with the same as it will not only enrich the shopping experience for buyers but will also further enable SMBs that do not have the necessary resources to handle deliveries at their end.
Further, Snapdeal will look to make 3-4 strategic acquisitions in the coming few months specifically in the area of mobile technology. With mobile commerce fast gaining pace in the country, Snapdeal.com within the next six months, will also set up an incubation centre to hone and harness start-up businesses in the mobile technology space.
Snapdeal, founded in 2010, has become the fastest growing and largest online marketplace in India, with more than 25 million registered users and more than 50,000 business sellers. Through this strategic investment and partnership with Snapdeal, the SoftBank Group aims to further strengthen its presence in India and leverage synergies with its network of Internet companies around the world.
Masayoshi Son, Chairman and CEO of SoftBank Corp. said, “Since SoftBank’s foundation, our mission has been to contribute to people’s lives through the Information Revolution. We believe India is at a turning point in its development and have confidence that India will grow strongly over the next decade. As part of this belief, we intend to deploy significant capital in India over the next few years to support development of the market.”
Nikesh Arora, Vice Chairman of SoftBank Corp. and CEO of SIMI said, “India has the third-largest Internet user base in the world, but a relatively small online market currently. This situation means India has, with better, faster and cheaper Internet access, a big growth potential. With today’s announcement SoftBank is contributing to the development of the infrastructure for the digital future of India. We want to support the leaders and entrepreneurs of the digital future; Kunal and Rohit are two such great leaders.”
Kunal Bahl, Co-founder and CEO of Snapdeal said, “Our entire team at Snapdeal is thrilled and honoured to have SoftBank as a strategic partner. With the support of Son-san and Nikesh, we are confident we will further strengthen our promise to consumers and create life changing experiences for 1 million small businesses in India.”
Nikesh Arora will be joining the board of Snapdeal as part of this strategic investment by the SoftBank Group.
Morrison & Foerster LLP acted as legal advisor to SoftBank, with Kochhar & Co. advising SoftBank on India law matters.