Snapdeal, which is right now going through a rough patch, has now more reasons to worry. A possible infusion of $100-150 million by Softbank has been cancelled, thereby making the fate of Snapdeal even more doubtful.

And an intense boardroom battle has been triggered, between majority stakeholder Softbank which backed off from the funding and Snapdeal’s early investors Kalaari Capital and Nexus Venture Partners.

Snapdeal is now stuck in a deadlock, and there seems no way out.

Softbank Refuses To Infuse More Funds Into Snapdeal

Everyone knows that funds within Snapdeal has dried up, and they are in dire needs of fresh funding: Not for expansion, but to survive.

They have already conducted mass layoffs to reduce expenses, and talks about a possible acquisition by either Flipkart or Alibaba has been making the rounds since last few weeks. Such is the bad condition that their vendors are claiming that Rs 300 crore is pending as overdue payments, and even Govt. had to intervene in between to de-escalate the issue.

Amidst this chaos, Softbank, which owns 33% stake in Snapdeal reportedly offered to infuse $100-150 million into Snapdeal, in order to diffuse the tension and give some breathing space to the management.

But suddenly, Softbank has pulled its lever and refused to allocate any further funds into the troubled e-commerce portal. This means two things:

a) Softbank, which has invested $900 million into Snapdeal till now, is no more interested in throwing money into a black hole.

b) Softbank, the largest investor in Snapdeal, now wants a handsome return from their existing investment into Snapdeal. Even if we remove ‘handsome’ from the equation, they need a return back, even that means a loss.

Boardroom Brawl Can Prove Costly For Snapdeal?

This sudden pull back from Softbank has triggered a cold-war inside Snapdeal’s boardroom, and things are looking ugly as of now.

On one hand is Softbank, with their 33% stake and having two seats in the board; while on the other hand are Kalaari Capital and Nexus Venture Partners, having 8% and 10% stake respectively, and having one seat each in the board room.

As per reports coming in, representatives from both Kalaari Capital and Nexus Venture Partners are angry on Softbank for ditching the company at the last moment.

One unnamed source said, “Both Kalaari Capital and Nexus Venture Partners are livid at the developments, and have questioned SoftBank about its intention with regard to Snapdeal..”

While, another person has explained Softbank’s intentions by saying: “There was a term-sheet offering Snapdeal debt financing for a period of three years, which was, inexplicably, withdrawn within days, giving credence that Soft-Bank has made up its mind about selling the company..”

In between are both the founders of Snapdeal, who have a combined stake of 6.5% in the venture.

Now, note here that Kalaari Capital had invested $27.4 million, and as per some unconfirmed reports, have already cashed in close to $100 million as return, when they sold their stake to Softbank in 2014. Meanwhile, Nexus has invested $40-50 million but hasn’t yet cashed in their investments.

As per earlier reports, Softbank was leading the negotiations to merge Snapdeal with Flipkart and get a return back from their investments.

Besides, reports also emerged that Snapdeal may opt for an IPO launch in 2019, and talks were already on with SBI Caps, Kotak Capital and other leading investment managers for executing it.

Things are still uncertain at Snapdeal, and there seems no way out.