Global investors unite against e-com policy
Global investors such as SoftBank Group, Sequoia Capital and Tiger Global are planning to build a common front to take on the draft e-commerce policy, which they believe is tilted towards Indian founders of the firms they have invested in.
Global investors such as SoftBank Group, Sequoia Capital and Tiger Global are planning to build a common front to take on the draft e-commerce policy, which they believe is tilted towards Indian founders of the firms they have invested in.
Battlelines are being drawn as foreign investors scuttle to secure their investments worth of over $75 billion they have over the last decade or so.
According to sources, SoftBank Group has written to the NITI Aayog, commerce ministry as well as officials in the finance ministry asking them to keep in mind the interest of investors and other stakeholders before finalising the e-commerce policy.
A delegation from 20 investors based out of countries such as the US, the UK, the UAE and Singapore would meet the NITI Aayog, commerce and finance ministry officials over the next two weeks, sources have added. “SoftBank reached out to the government and is asking them to make a fair and balanced e-commerce policy. In a scenario where almost 95 per cent of the capital in a company is pumped by investors, but they are not having any say is a matter of grave concern for these global players,” said a senior vice-president of a US-based investment firm. SoftBank declined to comment on the issue.
While these companies have Indian founders, they are run mostly with the money brought from foreign investors, experts believe. So having a ‘protectionist’ attitude after selling stake to expand firms is unfair, they say.
The task force that has formulated the draft policy consists of founders and senior management executives of companies such as Ola, MakeMyTrip, Zoho, UrbanClap, Paytm, Snapdeal among others.
Most of the unicorns or billion-dollar valuation firms like Flipkart, Paytm, Ola, Zomato and Swiggy have had the maximum stakes owned by foreign funds. The founders of all these firms have either single-digit stakes in their companies or in low-double digits.
Many believe the idea of founders having the total control of the company with even minor stake holding will disrupt the decision-making process, which is now taken by the board of directors keeping in mind the interest of all parties.
In 2017, almost $21 billion worth of PE investments made its way into e- commerce companies and start-ups.