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Indian adtech unicorn InMobi in talks to acquire social commerce startup Shop101

Written by Moulishree Srivastava Published on     3 mins read

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RedSeer projects the Indian social commerce sector to become a USD 7 billion opportunity by 2025, contributing up to 5% to the total e-commerce market.

Indian advertisement technology company InMobi, which owns mobile-first personalized content platform Glance and short video app Roposo, is looking to scoop up social commerce startup Shop101 to venture into the online commerce market.

The two companies “have been in talks over the past few months after Shop101’s early conversation with other companies, including Reliance and Amazon fizzled out,” said a report by local media Entrackr, citing sources. “Talks with InMobi have reached an advanced stage, and contours of the deal are almost finalized.”

The development comes five months after the Bengaluru-based company raised USD 145 million in a fresh funding round led by Google for Glance to expand its global footprint.

InMobi is valuing Shop101 around USD 30–35 million, 50% less than the USD 60 million valuation at which it had raised a small round from its existing investors last year to remain afloat during the COVID-19 crisis.

Founded by Abhinav Jain and Aditya Gupta in 2015, Shop101, so far, has raised almost USD 20 million, according to business intelligence platform Crunchbase, and counts Kalaari, Vy Capital, and Stellaris Ventures as backers. It competes with startups like Meesho, GlowRoad, and Mall91, among others.

Indian social commerce firms began attracting global investors in 2019, as more users warmed up to these platforms in the world’s second-most populous country. The sector suffered a huge setback last year when the COVID-19 pandemic hit and caused millions of people to hold on to their discretionary spending.

As the number of new infections went down in late 2020 and early this year, social commerce startups began seeing traction again. In December 2020, Bengaluru-based research firm RedSeer, projected the social commerce sector to become a USD 7 billion opportunity by 2025, contributing up to 5% to the total e-commerce market, which would expand to USD 140 billion then from USD 38 billion in 2020.

“This will be mostly driven by leading social commerce players like Meesho and Mall91, among others, and also includes video commerce by players like Bulbul and Simsim,” RedSeer said in the report.

Shop101, despite the prospects, was unable to get new investors on its cap table and thus held early discussions with Indian conglomerate Reliance and American e-retail giant Amazon for a potential acquisition earlier this March. Now that its valuation has been slashed down to half implies that there is a distress deal in the making.

Meanwhile, its rival Meesho raised USD 300 million in a funding round led by SoftBank Vision Fund 2 in early April, which shot up the startup’s valuation to USD 2.1 billion. A few days later, another social commerce startup, DealShare, which focuses on group buying of groceries and essentials, reportedly landed a USD 100 million check from Tiger Global.

However, the second wave of COVID-19 that started in April has swept the country off its feet in the last one and half months. Amid the ongoing pandemic, millions of people have cut down on spending, shelling out money mainly for groceries, essentials, work-from-home accessories, and medicine. Both digital and cash payments saw a monthly decline in May due to the weakened economic activity and subdued customer sentiments, according to data released by the Reserve Bank of India, the country’s central bank. It remains to be seen how local social commerce startups will bear the brunt this time.

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