Snapdeal reportedly secures $500M from Foxconn, Alibaba and SoftBank
Online marketplace Snapdeal has secured $500 million in a fresh round of funding from iPhone manufacturer Foxconn, Chinese e-commerce giant Alibaba and existing investor SoftBank, according to a report in technology news website Re/code.
Snapdeal will use the money to expand geographical reach and enhance the depth of its services in a bid to better compete with well-funded rivals such as US-headquartered Amazon and Bangalore-based Flipkart.
A spokesperson for Snapdeal, which is owned by Jasper Infotech Pvt Ltd, did not comment on the development till the time of writing this news report.
Snapdeal has already raised $1 billion from SoftBank Group Corp, eBay, BlackRock, Bessemer Ventures, Kalaari Partners and Nexus Venture Partners. The Delhi-based company also counts Ratan Tata, chairman emeritus of Tata Sons, as a private investor. Japanese internet conglomerate Softbank alone pumped nearly $657 million in the online marketplace in October last year, becoming the largest investor in Snapdeal.
The new round of funding comes a month after Flipkart was rumoured to have secured $700 million more from existing investors such as Steadview Capital. Amazon is said to be readying a $5 billion war chest for a bigger play in India. Interestingly, India burgeoning e-commerce landscape is now becoming a battleground for global rivals Alibaba and Amazon. Alibaba seems to be keen to take up positions in Amazon's Indian rivals. In February, Alibaba brought 24 per cent stake in One97 Communications, a mobile payments service provider that operates Paytm, through its affiliate Ant Financial Services Group.
With the latest funding, Alibaba is now backing two companies (Snapdeal and Paytm) who are directly slugging it out for supremacy in India's consumer internet space.
Few years ago, Paytm announced its foray into the e-commerce space, putting itself in direct competition with giants like Amazon, Flipkart and Snapdeal.
However, Paytm's competition with Snapdeal is more pronounced now.
While Paytm was among the first domestic internet companies to offer digital bill and utility payment services, Snapdeal caught up through its $450 million (Rs 2,900 crore) acquisition in April of mobile recharge firm Freecharge.
Last week, Snapdeal CEO Kunal Bahl said the company aims to generate profits within three years.
Snapdeal has upped the ante in the recent past with an aggressive inorganic growth strategy. In June, Snapdeal acquired Letsgomo, a mobility solutions company, for an undisclosed amount.
Before that, it acquired Hyderabad-based technology startup Martmobi to strengthen the mobility platform for merchants.
In April, Snapdeal bought mobile recharge platform FreeCharge which was regarded as the biggest acquisition in India's internet space.
In March, it acquired a majority stake in Gurgaon-based digital financial products distribution startup RupeePower. It is also said to have bought a minority stake in logistics firm QuickDel Logistics Pvt Ltd, which runs operations under the GoJavas brand. GoJavas is the former in-house logistics unit of lifestyle e-tailer Jabong.
Early this year, Snapdeal also bought lifestyle e-tailer Exclusively.in.
In the past, Snapdeal had picked up stake in Smartprix Web Pvt Ltd, which runs online product and price comparison site Smartprix.
Snapdeal was founded in 2010 by Kunal Bahl and Rohit Bansal as a deals website before becoming a full-fledged shopping portal with a marketplace model in 2011. Snapdeal registered nearly 17.9 million unique visitors in June this year. It sells nearly 500 million products across 500 categories and has 150,000 sellers registered on its site.
Recently, the company took on Quikr and OLX with a new, zero-commission mobile marketplace called Shopo.
Foxconn, officially known as Hon Hai Precision Industry Co Ltd, is the world's largest contract electronics manufacturer, and its clients include major American, European and Japanese electronics & IT companies like Acer, Amazon, BlackBerry, Cisco, Dell, HP, Microsoft, Motorola Mobility, Nokia, Sony, Xiaomi and Nintendo.
The company also assembles the bulk of Apple's iPhones and iPads and has factories in Asia, Europe, Mexico and Brazil.
At an annual general meeting two months, Foxconn founder Terry Gou had told shareholders that India is a key market this year for the group.
Meanwhile, on Monday, SoftBank said it has led a $100 million funding round in Delhi-based Oravel Stays Pvt Ltd, which runs the branded budget hotels marketplace OYORooms.com.
The telecom and internet giant had put in roughly $1 billion in India since last October, having backed Snapdeal, Ola and Housing.com.