BackIndia is the last big frontier for consumer Internet: Snapdeal’s Moondhra
The mobile Internet space will become very big and long-term the story is very good, says outgoing Snapdeal CFO Aakash Moondhra
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Aakash Moondhra, the outgoing chief financial officer (CFO) of Snapdeal, run by Jasper Infotech Pvt. Ltd and backed by Japan’s Softbank Corp. and strategic investor eBay Inc., talks about his role in the company’s makeover from a coupon firm to an e-commerce marketplace as well as his future plans. Edited excerpts:
What after Snapdeal?
I am evaluating going back to the investing world. I will either be joining a venture capital firm or a family office. Besides investing, I will help companies scale up operationally, leveraging the Snapdeal experience. India is presenting a unique opportunity from an investment standpoint and there is an entrepreneurial boom on the consumer Internet, mobile side. E-commerce is very close to my heart and the focus will always be around Internet and mobile and a large chunk of it would be e-commerce.
According to media reports, Snapdeal’s talks with Alibaba for a potential fund raise fell through. Is it just a coincidence that you are leaving at the same time?
With large investors, it usually takes a longer time to close the deal. We were in conversation with Softbank for over two years before they decided to invest in us. It will not be fair to comment on the rest.
How did you change Snapdeal in the last three years?
I joined Snapdeal at the time when the company was just pivoting the business from a couponing company to a products marketplace. These three years have been a phenomenal journey. There were a lot of question marks when we were pivoting the business because investors wanted to see some traction before reposing confidence in you. When I joined in 2012, we were on the road to raise funds and the market was not very good. 2015 is a different story. 2012 was a very tough time but we managed to pull it off. After that, we have done six different fundraisings, four equity financing, two venture-debt financing and multiple acquisitions.
When I joined, there were about 20-25 people in finance. Today, we have about 150. Building the team, establishing the processes can be challenging when you join a smaller company. It’s not been a traditional CFO role but much broader, as you contribute immensely to the business strategy. You are also responsible for having the right controls in place because the business touches millions of people on the customer, seller and fulfilment side.
Also, a CFO takes control of the compliance side and legal requirements. From a start-up standpoint, Snapdeal is an epitome of transparency, good governance and fantastic compliance. We have never been in the news for the wrong reasons or for having the wrong business model.
We have been a pure marketplace and we took that call when everybody else was doing an inventory led business.
How difficult was it to convince investors in 2012?
When the market is not good, you pitch to may be 100 investors and one buys it and when the markets are good, you pitch to 10 and one buys it. If I wear the investor’s hat... it is very tough for the investor to take a call when the company is changing the business model.
There were doubts if we could successfully pivot the business. That’s when they want to see the leadership and get convinced that they can pull it off.
What were some of the lessons you learnt from 2012 experience?
One big lesson was, never ever give up. That is how eBay happened. Once we had that money, there was no looking back. But before the funding round, we had to turn on some levers and turn off some others. We had to manage our cashflows very carefully to survive till the time we raised money. We also had to do bridge financing at that time... we did debt financing from SVB Finance. Things started falling in place after that. While the last round was about survival, the next rounds were more about growth and Snapdeal becoming the Alibaba of India.
Were you comfortable with eBay as a strategic partner at that early stage?
Ebay is a global leader, they have done extremely well and there will be a lot to learn. They have experience in different markets, Korea, Australia, Latin America and we knew we could learn a lot from their experience.
Are you comfortable with the kind of shareholding rights they managed to take?
Yes, from a shareholding perspective, it is just a fair transaction from everyone’s point of view, whether it be investors, founders or the company.
How easy is it going to be for Snapdeal to raise funds going forward?
Investors will definitely do their checks before anybody puts in money, but I think given the robustness of the company today, it is not going to be tough.
We have all sorts of investors… we have series A, series B investors, strategic investors in the form of eBay and then we have strong investors such as Softbank and financial investors which are very pedigreed such as Temasek, Blackrock.
We have a wide set of investors. Though it makes it very challenging at times as the expectations of different investors are different, but it also fine-tunes our ability to deal with all of them.
What are some of the areas Snapdeal needs to work on?
It’s a classic challenge with any high growth organization that sometimes the processes will lag behind. Increasing process orientation in the company is important. More and more automation and lesser human touch is required.
What is your take on valuations in the e-commerce market?
India is the last big frontier for consumer Internet space and smartphone penetration is increasing like crazy.
This mobile Internet space will become very big and long term the story is very good. This could be a $200 billion market—who knows. Yes, in the rush to get the lion’s share of market, there could be some blips here and there just like an ECG graph. In the long term, story is intact and yes, it is a big opportunity.
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