Vani Kola, founder of Kalaari Capital, has resigned from the board of Snapdeal. The resignation comes as the e-commerce company's largest investor, Japanese telecom and internet giant SoftBank, gears up to merge the firm with larger rival Flipkart.
Kola resigned on May 2, regulatory filings sourced from data firm Tofler said on Sunday.
Kola is among the earliest investors who, along with Nexus Venture Partners (NVP), backed the discount coupons firm in 2009 with a $12-million investment. Kunal Bahl and Rohit Bansal, founders of Snapdeal, used the money to pivot the company into the e-commerce marketplace.
Since then, Snapdeal has transformed into India's second largest e-commerce firm, raising close to $1.7 billion and taking its peak valuation to $6.5 billion.
But a focus on building valuation, instead of value, hurt Snapdeal in a global downturn of investments.
Investors called for tightening of belts and for a shift towards profits than vanity metrics. The company, which rivalled Flipkart in market share claims, lost to global rival Amazon, which had a $5-billion cheque from its founder Jeff Bezos and focused more on metrics.
Snapdeal's rival Flipkart also faced a similar situation with its backer Tiger Global taking charge of the company, rationalising costs and turning around the company to take on Amazon. Flipkart overtook Amazon in sales during the previous festive season and raised fresh funds at valuations of $1.4 billion at $11.6 billion from investors such as Tencent, Microsoft and eBay.
As Snapdeal had little to show for the investments from its main backer SoftBank, which has invested over $900 million, the time for a fire sale neared. SoftBank has written off close to $1 billion in losses last year in Snapdeal.
However, the biggest bottleneck came from Kalaari and NVP, the earliest backers.
SoftBank owns 33 per cent, while Nexus has around 10 per cent and Kalaari eight per cent in Snapdeal, according to documents filed with the Registrar of Companies. After hectic negotiations, Kola, founder of Kalaari, agreed to a deal in late April that would fetch $70-80 million, while NVP came around last week. NVP is expected to get around $80 million as exit money for its stake in Snapdeal, in a combination of cash and stock in the merged entity.
With the decks cleared, SoftBank is likely to sign a term sheet this week that would allow Flipkart to do due diligence of Snapdeal.
Softbank is likely to spend as much as $1.5 billion to buy a double-digit stake in Flipkart from Tiger Global.