Snapdeal today said it raised $627 million in a round of investment led by Softbank, making the Japanese telecom and media group the largest investor in the Indian online retailer.
The companies did not divulge Sotbank’s holding in India’s third biggest online marketplace, post the deal.
With the latest round of funding, Snapdeal has raised close to $950 million this year alone, in three different rounds. The company plans to use this investment to enhance its technology, improve supply chain management and increase its workforce to 1000 people by the year-end. The money will also be used to make new acquisitions and double its chain of fulfillment stores which, will span 30 cities, the company said.
The Japanese giant, which has closed a slew of high profile deals this month, including acquiring a minority stake in Hollywood studio Legendary Studio for $250 million, also announced yet another investment in an India startup. Softbank will be picking up equity interest in India’s Olacabs for $210 million.
“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,” Masayoshi Son, chairman and chief executive of SoftBank Corp, said in a statement.
“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,” SoftBank Corp Vice Chairman and CEO of SIMI Nikesh Arora said. SIMI is the investment arm of SoftBank Corp.
This round of funding sets the value of Snapdeal at around $2 billion. This is double the valuation from when Snapdeal last raised funding five months ago. The online retailer had raised $100 million in May this year from a consortium of investors that included Singapore’s Temasek, BlackRock Inc, Myriad, Premji Invest and Tybourne. Prior to that, it had raised $133.77 million in a round that was led by eBay.
The other investors in Snapdeal include eBay Inc and former chairman of Tata conglomerate, Ratan Tata.
Softbank’s investment in Snapdeal comes within days of it leading $100 million funding in Indonesia’s leading e-commerce marketplace, PT Tokopedia, in what is considered the largest ever investment received by an Indonesian startup.
According to Gartner estimates, India’s e-commerce market is set to nearly double in size od consumer spending, going from $3.6 billion in 2014 to $6 billion next year. In July, analysts at Nomura, had said the country’s e-commerce industry’s was at $10 billion in 2013, adding that it could quadruple to $43 billion in the next five years.
Earlier this year, in July, Snapdeal’s primary competitor and India’s largest online retailer Flipkart had raised $1 billion. SoftBank is also the largest investor in China’s Abibaba.