After raising a tiny amount of $1 million in what appeared to be a bridge round early this year, struggling e-commerce firm Shopclues has managed to ensure a significant top-up on that amount with a fresh round of funding, according to sources privy to the development.
The company has raised over $16 million additional fund this year, Sanjay Sethi, co-founder and chief executive officer, has communicated to his employees in an email sent a couple of days ago. While the email doesn't mention the name of the investors, according to one of the sources mentioned above, this money has come from existing investors Nexus Venture Partners and Tiger Global.
Moneycontrol has seen a copy of the email.
The company, which became a unicorn (firm with a valuation of $1 billion) during its 2016 funding round, has been facing tough times of late. In the last few years, it has also braved quite a turmoil with a change in the management. Reports of a potential acquisition by US-base e-commerce firm eBay were also creating speculation about the future of the company among its employees.
In the email, Sethi has addressed this issue saying that the company was targeting to break-even by November with a reduced burn rate of $0.5 million per month as against $5.5 million in January 2017.
Shopclues also has plans to expand its operations in the US, Nepal, Bangladesh and Sri Lanka, this month, the mail said without stressing upon the investment it plans to make across these countries.
Started in 2011, the company has raised close to $250 million in funding so far, including a $7.73 million debt round in 2017 from Innoven Capital.
Pitted against bigger rivals Flipkart and Amazon, Shopclues till date has managed to be steadfast in in its strategy — to cater to India's tier 2-3 towns.
The development comes even as the daily orders of the company have shrunk to 50,000-55,000 per day against 70,000 during good old days.
While the company spokesperson declined to comment on the funding, in a blog on its website, it claims to have acquired about 40 million of total customers. The blog says that that the growth is led by non-metro consumers.
"Today we have upwards of 60 million SKUs (stock keeping units) from more than 600,000 merchants. 70 percent of these merchants are from tier 3 and 4 locations. Our top 20 merchants contribute to less than 8 percent in terms of orders and revenue," it said in the blog.
The company has so far focused on the unstructured categories. As a result of which it now claims to have grown 300 percent in its per-order net revenue. It also claims that its contribution margin became positive in the first quarter of 2017 and is now Rs 65 per order.
Shopclues reported its revenue from operations to be $42 million during the financial year ending March 2018, against $28 million during the previous financial year. The losses too have reduced to $31 million in FY18.
According to at least two sources privy to the development, Shopclues was also in talks for a potential merger with rival Snapdeal and Paytm Mall last year. Both the deals did not materialise.
This capital is expected to give Shopclues some breather for the time being as it faces heavy competition from giants such as Amazon and Flipkart.
Generally, when such internal rounds happen, it means that existing investors want to give the company some money to go forward. This bridge round could well be a path to something bigger and it will buy some time for the company to execute their plans in in terms of reducing the cash burn.
But Sethi claims that $16 million is "more than sufficient" to get the company to profitability and its growth targets.