1Mby1M Virtual Accelerator Investor Forum: With Suresh Shanmugham of Saama Capital (Part 3)

Sramana Mitra: That company has gone in a different direction since then. Why don’t you talk about what you see in that situation? That would give us a good segue into a trend discussion on Indian e-commerce, especially given the shifts that are happening there. What is your current analysis of the Indian e-commerce market?

Suresh Shanmugham: It’s been three years since we exited Snapdeal. We had a great opportunity to provide returns to our investors. The company had performed very well ahead of what we had underwritten to. The market really getting frothy on the e-commerce front with the type of funding activity and the valuations being discussed. Several folks were interested in our position.

Ontario Teachers was very aggressive about wanting to buy out our stake at a very good price. Ash and I, having the benefit of spending a lot of time in the US, know how these cycles run their course. We knew that a lot of damaged companies are left behind after a bubble burst. We didn’t think that Snapdeal was going to be that, but we knew that there was going to be downdraft that would affect all the companies.

Our job is to deliver returns to our investors. We have the opportunity to do so. The time was right. It would obviously help us in raising our next pool of capital. It was the right thing to do on a number of fronts. It helped bring a deep pocket of investors to the company.

Sramana Mitra: What happens to Snapdeal now given the current scenario?

Suresh Shanmugham: I’m reading it in the press just like anybody else. It seems like they’ve significantly cut the burn rates. They’ve trimmed the company back and they are monetizing some of the assets that they have to help support their cash position to allow them to stay on the table.

Kunal and Rohit are very savvy entrepreneurs and operators. While it may not seem obvious what the ultimate game is, they’re staying at the table. My sense is they will find a way to survive. I believe they’ll thrive. It isn’t obvious what the game plan is to everybody on the outside.

Sramana Mitra: Give me your analysis of the Flipkart, Walmart, Amazon situation.

Suresh Shanmugham: India is still a prized market to be in. There’s a clear number one and a clear number two. You have Walmart that made a very bold move with their whole push towards e-commerce. It’s a major move to take control of the number one player. They also fended off Amazon, which is no small thing to do. It’s a great thing on a number of fronts.

I think you got a strategic exit. You have a success story. I think you have people that are would-be entrepreneurs that now see the value of what equity can become. Think about how many people’s lives have been changed by the success of Flipkart. Not just their immediate family but for generations to come. It’s a great thing. It’s something that validates the entrepreneurial path.

Sramana Mitra: I have to say this sort of an exit was absolutely necessary.

Suresh Shanmugham: You had everything else lining up. You have capital. You have smart entrepreneurs. You have technical talent. The one thing that was missing was this kind of lightship type event that stands out.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Suresh Shanmugham of Saama Capital
1 2 3 4 5