ShopClues raises INR50 crore debt capital from InnoVen Capital

ShopClues, the ecommerce player in the domestic market, has raised INR50 crore venture debt from InnoVen Capital primarily as a short-term arrangement for working capital and day-to-day business activities. This is the first funding round after January’16 when the firm raised $100-140 million capital from Singapore’s sovereign wealth fund GIC Pte. Ltd, and existing investors Tiger Global Management and Nexus Venture Partners, at a valuation of over $1.1 billion.

Sanjay Sethi, CEO ShopClues, said that “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 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”

Although ShopClues clocked INR179 crore of revenues in FY16, its losses during the same period stood at a high of INR383 crore. However, its burn rate is much lower than the other two ecommerce leaders i.e. Flipkart and Amazon. ShopClues spends much less in marketing expenses compared to its peers and thus is expects to break even faster.