Snapdeal owner Jasper Infotech is inching closer to securing a lifeline from Japan’s SoftBank Corp, its largest shareholder, but the transaction could drag its valuation to under $3 billion.

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India’s Unicorn Startups Raising Funds With
Lower Valuation
Snapdeal owner Jasper Infotech is inching closer to securing a
lifeline from Japan’s SoftBank Corp, its largest shareholder, but
the transaction could drag its valuation to under $3 billion.
#DigitalErra Thought Corner
SoftBank is negotiating to invest $100-150 million in Jasper in
tranches, according to three people familiar with developments. A
fourth person said overall investment could be as high as $300

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million in Jasper, which is grappling with slowing sales and has
been forced to cut jobs.
Jasper and SoftBank have been going back and forth the last two
months on crucial terms of the deal, including on the investment
size and the valuation, these people said, declining to be
identified. Jasper’s board has held talks with SoftBank for raising
funds at a valuation of $1.5-2.5 billion, they said.
Unicorn Startups Facing Valuation Markdown
Just like Snapdeal, India’s taxi aggregator service, Ola too saw a
40% markdown in its valuation by US investment firm Vanguard
Group. The markdown indicates an overall valuation of close to
$3.5 billion. It had hit a peak of $5 billion when the company
raised USD 500 million in November 2015.
Last month, Ola got a new lease of life when it raised $350
million from existing and new investors that include Softbank,
Tiger Global, Sequoia Capital and Matrix Partners.

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Similarly, homegrown e-commerce major Flipkartis in the final
stages of raising its latest round of funding in the range of $800
million to $1 billion from both existing and new set of investors
but this is likely to come at a lower valuation of $7-8 billion.The
e-tailer had last raised funds in July, 2015, to the tune of $700
million at a valuation of $15.2 billion but since then the situation
has witnessed a dramatic change for both the company and
industry.
Markdown- A Reason To Re-Evaluate Business
An entrepreneur can consider markdowns as pointers to
fundamental problems in the business that needs to be solved. It
would push to become more realistic, pragmatic and action
oriented. Markdowns should be seen with similar sentiments in
Indian ecosystem.
We started growing our business much before the right economic
model and market fit was figured out. We also started diversifying
and starting new projects while we still hadn’t perfected the first
or made it profitable. We started building our team and

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capabilities for a much larger size of business than what was
required with the present scale,”KunalBahlof Snapdeal wrote in
an email to his employees.
Markdown stories should push entrepreneurs to appreciate the
value of creating sustainable businesses. Rather than running
after raising truckload of money, entrepreneurs should resolve to
become a viable business with few rounds of funds. So,
markdown can essentially be seen in a positive way by
entrepreneurs.
Latest talks of funding are also a good sign for e-commerce
industry where Snapdeal and Flipkart would have required these
much needed funds to stave off fierce competition from rivals like
Amazon and the latest entrant Alibaba. Amazon has already
committed $5 billion of investment in the Indian market.
“Regardless of valuation, the fact that money is available is a
good sign,” said Harish HV, partner, India Leadership team, Grant
Thornton India. “It means investors, whether new or existing,

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haven’t yet given up on the company and that there is meat left.
It’s a sign of bullishness.”
The founders do not decide valuation as they are not the majority
shareholders. It is usually decided by the board. With the entry of
Alibaba, India’s e-commerce ecosystem will bring the best out of
its major stakeholders amidst tighter budgets and lowered
valuations.