ShopClues raises nearly $8mn in venture debt from InnoVen Capital; now worth $1.1bn

Online marketplace ShopClues has raised Rs 50 crore (approx $7.8 million) in venture debt from InnoVen Capital. The latest investment comes nearly 15 months after the home-grown unicorn raised $100-140 million from Singapore’s sovereign wealth fund GIC Pte Ltd, and existing investors Tiger Global Management and Nexus Venture Partners.

ShopClues hasn't raised debt for any acquisition or for working capital but primarily for day-to-day business activities.

"A company which is getting close to profitability has the option to raise either equity money or debt. Equity will lead to dilution, but you can pay off debt through your balance sheet. Debt is a good instrument to meet the working capital requirement or any gaps to plug to achieve profitability. We are profitable on a contribution margin level but need to achieve a scale where we can cover our fixed costs. Our burn is reducing consistently. Hence, debt comes into play so that we can scale rapidly and reach profitability," said Chief Executive of ShopClues, Sanjay Sethi in a statement to Mint.

According to research firm Tofler, ShopClues generated revenues worth Rs 179 crore for the financial year that ended on 31st March 2016 but its losses have mounted too and reached Rs 383 crore. But, even with those losses,  company’s burn rate is substantially lower than that of its bigger competitors, Flipkart, Amazon, and Paytm.

The current stagnation in the Indian e-commerce market, however, doesn't bode well for a company like ShopClues. And, with reports of Snapdeal’s possible merger with Flipkart, there have been speculations that Tiger Global, a common investor for both Flipkart and ShopClues may arrange a merger between the two as well. Well, we'll have to wait and see if and when that happens.