Jasper Infotech Pvt. Ltd, which runs Snapdeal, on Wednesday said it would cut more jobs, stop paying its founders and sell its digital wallet FreeCharge. Snapdeal will lay off 500-600 employees across verticals as co-founder Kunal Bahl admitted to making mistake in growing much before it could figure out right economic model.
Struggling to raise fresh capital, Snapdeal will stop all non-core activities, reduce costs drastically and handover pink slips to employees to turn profitable. The Times of India had reported on Wednesday that the final number of layoffs could run up to 1,500.
As per a source close to the development, the employees that have been fired have been provided 3 months severance pay.
In an e-mail to employees, Bahl conceded that over the last 2-3 years, with all the capital coming into this market, the company and the entire industry “started making mistakes”.
“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 capabilities for a much larger size of business than what was required with the present scale,” he said.
During its journey the homegrown ecommerce giant has raised about $1.76 Bn funding in 12 rounds. The most recent investment came in August 2016 from Luxembourg-based firm Clouse SA, that invested another $21 Mn. This was a part of the same round where Snapdeal raised $200 Mn funding in February this year. The new round in February valued the company somewhere between $6.5-$7 Bn.
Snapdeal was valued at $5 Bn during its funding round in August 2015, where it had raised $500 Mn from Alibaba Group, Foxconn Technology Group and Softbank.
Recent media reports suggest that Snapdeal is in talks with its main investor SoftBank Group to raise fresh funds at a lower valuation, ranging between $3 billion and $4 billion.
Losses at Snapdeal more than doubled to Rs 2,960 crore (around $436 million) for the financial year ended March 2016. The firm’s consolidated loss widened to Rs 3,315 crore from Rs 1,328 crore in 2014-15.