Rohit Bansal, co-founder of India’s second-largest ecommerce player Snapdeal, believes that valuation is a combination of ‘real business value’ and ‘market sentiments’. Earlier this month, the Gurgaon-based Snapdeal, backed by Japan’s SoftBank Group, was reported to have raised $200 million in funding, valuing the company at approximately $7 billion.
“Valuation is always a combination of two factors: Real business value in your business and market sentiments based on which companies can be valued,” said Bansal at SURGE, a two-day conference in Bengaluru on Tuesday, which was backed by the organisers of Web Summit, one of the world’s biggest technology and startup events. Bansal was in conversation with Forbes India editor Sourav Majumdar at the opening session at SURGE.
Bansal pointed out that valuation is an outcome of all the right things you do, but cautioned that: “If valuation starts influencing the business, then I don’t think you are running the business in the right way. It is just a number to us. We are more excited about what we are building.”
Started in February 2010, Snapdeal is one of India’s first ecommerce players to adopt a marketplace model, which is now the preferred model in the sector. “As entrepreneurs, we always keep reminding ourselves that we are in an ultra marathon and not even a marathon. We need to keep our heads down and keep working on the right things,” said Bansal.
Over the last six years, the online marketplace player has been aggressive in its acquisition strategy. Last year in April, Snapdeal made one of the largest internet acquisitions in the country by buying FreeCharge for about $400 million. The deal was expected to strengthen Snapdeal’s position in the rapidly growing consumer internet industry in India. “We are a fairly acquisitive company and have acquired many companies in the last few years. We have done somewhere between 12 and 14 acquisitions so far, but not one of the founders of the companies that we have acquired has left Snapdeal. All are with us,” said Bansal.
According to him, it is the company’s deep rooted culture of entrepreneurship and decision-making that has worked in its favour. “As long as we can keep this culture alive where founders of small organisations feel at home when they are part of our team, I think we are doing the right thing. That’s what makes all our acquisitions successful.”
At present, Snapdeal has over 275,000 sellers on its platform compared to about 1,000 at the end of 2012. According to a report by Morgan Stanley released in February 2015, Snapdeal ranks second occupying 32 percent of the ecommerce pie in India, next to market leader Flipkart at 44 percent.
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