Much to gain from being snapped up

Much to gain from being snapped up

Snapdeal’s sale to Flipkart is not exactly a fairy-tale ending, but is not a horror story either. The company’s promoters have not done as well as they could have hoped for, and have to be content to be dollar millionaires rather than billionaires, but they can probably live with that.
The early backers of the promoters have got a decent, if not fabulous, return on their investment and probably end up with some stake in the acquirer. Late-stage investors who came in with big money and the clout to force the sale, namely SoftBank, have been able to carry out the strategic restructuring they deemed necessary, after the valuation of the company dropped after they had invested.
India presents itself as a country where startup investments face primarily business risks that is the job of the investor to evaluate and not much of regulatory risk. All this is to the good.
Reports suggest that SoftBank was opposed to handsome valuation of the stake to be acquired from the promoters. The investor blamed the promoters for their poor execution.
Considering that the e-commerce game in India has primarily been one of capital dumping, investors have to take the blame if their venture had less cash to burn than their competitors have. But, in all fairness, did Snapdeal founders invest in creating an e-commerce platform that India’s masses, who do not read English all that well, if not at all, could access? They did not.
Could that have brought on board a customer base many times as large as they English-speaking one? It could have. Would the investment required to tap this customer base be justified by the additional revenue and potential profits inherent in it? Probably.
This is something that the e-commerce companies that remain standing will probably try out. We wish the promoters who have exited all the very best in their next venture or ventures.
With some cash of their own to invest in them, the promoters can afford to be more selective in taking on-board outside investors who could potentially oust them at a later stage. Good luck to Flipkart as well, as it takes on Amazon and Paytm, with the help of Snapdeal’s added heft.