The final nail hasn’t been hammered into the coffin yet.
It isn’t official.
But it is common knowledge that Snapdeal’s goose has been cooked – it is just a matter of now deciding who gets to devour which piece and how much will they pay for this pleasure.
It is also common knowledge that the chef orchestrating this is Softbank – Snapdeal’s once-benefactor and its largest investor.
There have already been reams of print and streams of pixels devoted to documenting the blow-by-blow account of how Softbank corralled the founders and other investors to consent to this deal. Ditto for the majority of stories postulating on how Snapdeal ended up in this predicament.
Unfortunately, many of these stories are prosaic, narrating petty boardroom shenanigans and investor posturing with a level of detailing that would bore even the most ardent startup observers to sleep. Or startup gurus jostling with each other to proudly proclaim how they had predicted this with remarkable foresight eons ago and why Snapdeal’s fate was all but inevitable. Isn’t hindsight bias a wonderful thing?
Despite its inglorious demise (or maybe because of it?), Snapdeal is a fascinating story. It is an outlier in so many ways that attempting to draw any generic lesson from its fate is a contrived exercise. But there are still enough gleanings – none of these fit any pattern, some are largely observations while others may well be wild-ass predictions. If that doesn’t deter you from reading on, read on!
“You know what’s not cool? A billion dollars”
Snapdeal was one of India’s first startup “unicorns”, reaching a valuation of a billion dollars but it is also India’s first “unicorpse” – the first unicorn to be cremated.
But wait, isn’t Snapdeal being acquired for a rumoured sum of $1 billion? Surely that is worth something, after all no Indian startup has ever seen an acquisition exit of this size.
That would have been true if the company hadn’t raised more than $1.5 billion in funding. So this means that in total, investors are not going to get back the money they had invested, much less a VC-worthy return.
But there is a far more important reason why this billion dollar tag is a chimera.
To any buyer, Snapdeal is not actually worth a billion dollars. It is probably worth zero or even less.
This price tag is an arbitrary artificial construct that its protagonists could well have pulled out from thin air.
Which brings me to the next point.
“Look ma! No Strings”
Why would Snapdeal be worth a billion dollars to Flipkart? Is it bringing any incremental strength to the table, some competitive advantage in the market that Flipkart doesn’t possess on its own? Nope.
In fact one could easily argue that Snapdeal is going to be an albatross around Flipkart’s neck, which is already weighed down by the detritus of multiple startups (see our graphic).