The transaction is believed to have valued ShopClues at $70-$100 million, according to three sources aware of the developments, in what is possibly the largest valuation meltdown for a venture-backed Indian startup, given that ShopClues at its peak was valued at $1.1 billion in late 2015 after bringing on board marquee investors such as Tiger Global Management and GIC, the Singapore Government-owned sovereign fund.
This was also a period when it went lockstep with other domestic retail powerhouses Flipkart, Amazon India and Snapdeal to try and gain pole position in India’s highly-combative ecommerce sector.
As part of the transaction, Qoo10 will also acquire Momoe, the payments arm of Clues Network, which also owns the ShopClues marketplace. The ShopClues brand name also may not be retained post the closure of the transaction, sources said.
The Gurugram-based ShopClues confirmed the transaction following a detailed questionnaire ET sent earlier on Thursday.
Additionally, Qoo10 CEO Ku Young Bae had earlier invested an estimated $1 million in ShopClues in his personal capacity, but through a special purpose vehicle, according to the sources mentioned above.
“This (deal) is one of the largest write-offs for investors like Nexus Venture Partners and Helion Venture Partners, which had a sizeable exposure to the company across their funds,” said one person aware of the deal.
Qoo10 is a Southeast Asian e-commerce platform, formerly known as GMarket, headquartered in Singapore. It operates localised online marketplaces across Singapore, Indonesia, Malaysia, China and Hong Kong.
In 2015, the company raised $82.1 million from Singapore Press Holdings, eBay, Saban Capital Group, UVM 2 Venture Investments, Brookside Capital and Oak Investment Partners.
ShopClues, founded in 2011 by Sandeep Aggarwal, has had a tumultuous leadership history, with its founder stepping down as chief executive in 2015 after being charged with insider trading in the United States, and handing over operations to Radhika Ghai Aggarwal and Sanjay Sethi.
The cash-strapped company has been scouting for fresh investments, having survived on multiple bridge rounds from its existing set of backers, and later looking for buyers after fresh financing rounds failed to materialise.
Tiger Global, which had pumped in between $80-$100 million into the company, later wrote off the entire investment.
ShopClues, which is a wholly owned subsidiary of US-based Clues Network Inc, last raised Rs 7.8 crore from its parent entity in September, regulatory filings show.
It had entered into negotiations to be acquired by Snapdeal, that could have seen Ghai, Aggarwal and Sethi get a 10% stake in the latter, but the deal failed to go through after the companies failed to agree on a number of critical issues.
“It was only during the due diligence process that Snapdeal figured ShopClues had unpaid dues to vendors running up to $30-$40 million. Snapdeal was not ready to take that on,” a person who was involved in the talks had told ET earlier.
ShopClues, which was once known for keeping its expenses low compared to peers, however, continued to lose market share with the likes of Flipkart, Amazon and Snapdeal, post its pivot in 2017, seriously looking to capture customers beyond the top cities.
At its peak, around end-2016, the company was processing about 80,000-90,000 orders a day. It was at the time heading towards total sales or gross merchandise value of about $700 million. In FY17, it would clock Rs 188 crore in revenue.
ShopClues’ daily orders have dwindled to a mere 2,000 from a peak of close to one lakh in 2016. In April, its desktop and mobile web traffic stood at 12.2 million, according to SimilarWeb. This number fell to nearly 8.2 million in September, the analytics firm indicated.