Snapdeal looks to raise funds at lower valuation with SoftBank

Binu PanickerMoneycontrol BureauSnapdeal has begun fresh round of discussions for additional funds, largely with its existing investor SoftBank Group Corp. However, this time, the company -- which had reached a peak valuation of USD 6.5 billion during a previous round of funding -- is looking to raise funds at a significantly lower valuation this time, Mint reported quoting sources.SoftBank has offered to fund the e-tailer at a valuation of close to USD 3-4 billion even as the latter is on the lookout for new investors willing to buy stake at a better price.If Snapdeal manages to strike a deal, it will be the first time it has taken a hit on its valuation.Even as e-commerce firms have struggled over the last one year, Snapdeal had managed to ensure its valuation continued to remain high. Recently, BlackRock Inc., one of Snapdeal’s mutual fund investors, maintained its valuation estimate of the company. In contrast, industry leader Flipkart saw its valuation being struck down by as much as 40 percent by multiple investors.Gurgaon-based Snapdeal also held talks with several strategic and financial investors to part-monetise online payments firm Freecharge, which was acquired by it in April 2015. Mismatch in valuations expectations saw the deal going down the drain.So far, Snapdeal has managed to remain cash rich, and is sitting with more than USD 250 million in the bank. However, citing slow funding market, the company is building a war chest to combat stiff competition from Amazon and Flipkart.Though revenues increased 56 percent to Rs 1,457 Snapdeal reported losses amounting to more than 100 percent in the year ended March 31, 2016. The company has undertaken several cost-cutting efforts to bring itself back on track of profitability by lowering the cash-burn.Snapdeal slipped to a distant position of number three on the marketplace, trailing behind rivals Amazon and Flipkart in the past 1-1.5 years, as per reports.