After SoftBank Group’s chief operating officer Jonathan Bullock resigned from the board in February 2017 followed by the appointment of managing partner Kabir Misra on 10 March, Jett’s appointment is the third board movement from SoftBank to Snapdeal. The move comes at a time when the company is facing financial woes of its own.
In January, Mint reported that Jasper Infotech Pvt. Ltd-owned Snapdeal had initiated discussions to raise fresh funds at a lower valuation, which recently concluded in an intra-board tiff: a conflict of interest between Snapdeal’s investors, Kalaari Capital and Nexus Venture Partners on one side, and SoftBank Group Corp. on the other had led the company miss out on at least two funding offers over the past six months, Mint reported on 31 March.
While early investors Kalaari and Nexus together own roughly 18% stake in the company, SoftBank , the largest shareholder, owns 33% in the e-commerce firm.
SoftBank has also been reported to be the driver of talks with Paytm and Flipkart to sell Snapdeal, in addition to infusing $50 million cash cushion to the company until a merger materializes, Mint reported on 22 March. For such a round to happen, Snapdeal’s other board members may need to be bought out or be convinced to take a large haircut on their investments.
SoftBank has already pumped roughly $900 million into Snapdeal.
Pushing sales through deep discounts and large marketing spends, e-commerce in India has been popularly criticised for burning a large sum of cash, which has resulted in the cash-deprived state of Snapdeal. As a result, the company has cut hundreds of jobs, slashed spending on discounts and marketing and has seen a sharp drop in monthly sales.
Mint reported on 17 February that Jasper Infotech had about Rs1,100-1,200 crore cash left in the bank and Rs300-400 crore at its payments unit Freecharge at the end of 2016; the company registers an average monthly burn of about $25 million (about Rs160 crore), which includes the cash spent on its mobile wallet firm Freecharge over the past nine months of the financial year ending March 2017.
Snapdeal has also seen the exit of senior executives in the past two months, including Freecharge chief executive Govind Rajan and head of partnerships and strategic investments Tony Navin.