SHOPCLUES RAISES ₹50 CR VENTURE DEBT FROM INNOVEN

BENGALURU: Online marketplace Shop Clues has raised ₹50 cr ore in venture debt from In no V en Capital, ina rare instance of a homegrown unicorn opting for venture debt. The capital infusion comes over 15 months after ShopClues, owned by Clues Network Inc, entered the unicorn league by raising$100-140million in January 2016 from Singapore’ s sovereign wealth fund GICP te Ltd, and existing investors Tiger Global Management and Nexus Venture Partners, at a valuation of over $1.1 billion.

Startups typically raise debt when they are running short of cash, for working capital and to fund acquisitions, among others.

ShopClues said it raised debt 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 working capital requirement or any gaps to plug to achieve profitability ,” Shop Clues chief executive San jay Set hit old Mint.

“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. Hence, debt comes into play so that we can scale rapidly and reach profitability.”

Contribution margin is the selling price minus variable costs, a metric that assesses whether companies can meet the variable cost with revenue.

According to research firm Tofler, ShopClues clocked revenues of ₹179 crore for the year ended March 31, 2016, while losses stood at ₹383 crore. The company’s burn rate is far lower than bigger rivals such as Flipkart, Amazon and Paytm.

Some analysts are still doubtful about the viability of ShopClues. India’s e-commerce market nearly stagnated at $14.5 billion in 2016 compared with $13 billion the year before, according to consulting firm Red Se er Management Consulting Pvt Ltd.