Even as India startups are swarming into the unicorn club — a dozen companies have made the elite list over the last 18 months — there are some that could be exiting too.
Swedish investment firm Kinnevik has marked down the valuation of Quikr by 45% to about $570 million from more than $1 billion as of September 2019, the firm said in its annual earnings statement earlier this month. Kinnevik noted that the reduction in Quikr’s worth is due to the company “reducing its footprint”. Additionally, it changed methodology of valuation from discounted cash flows to net revenue multiples “linked to the trading of its publicly listed peers”, Kinnevik executives said in an analyst call. Kinnevik has a 17% stake in Quikr and is one of its largest shareholders, having pumped in $106 million into the company.
There had been signs of disquiet at Quikr over the last few months. In December last year, Quikr had laid off 2000 employees from across its cars and bikes, jobs, Quikr Realty and Quikr homes verticals. It had also discontinued its “AtHomeDiva” beauty vertical. The layoffs had caused the strength of the Bangalore team to go down from 2700 to 1500, while the Pune team has been cut from 170 employees to just 32. Layoffs were reported in the Delhi and Mumbai offices as well.
More worryingly, Quikr appears to have been a victim of fraud — a fraud that was perpetrated by its own employees. Three Quikr employees had reportedly defrauded their own company by forging businesses transactions to fictitious clients and earning millions in the process. The scam led to a Rs. 20 crore loss for Quikr. Kinnevik acknowledged the fraud in its business call.
Quikr isn’t the only Indian startup to have its valuation slashed. In 2016, Zomato had had its valuation slashed by HSBC which put it out of the unicorn club, but the company now commands a valuation of over $2 billion. In 2017, Flipkart’s valuation had been slashed from $16 billion to a mere $5.5 by investors, but the company had managed to finally get acquired at a valuation of $21 billion. But not every company has managed to recover from a valuation cut — Snapdeal was once valued at $6 billion, but now is barely worth $1 billion; ShopClues, too, was once part of the unicorn club, but was eventually acquired for $70-$100 million in October last year. Quikr is now seeing a valuation cut of its own, but Kinnevik seemed hopeful of a recovery. “The whole purpose of downsizing the company (was to) get in a situation we’re not dependent on external capital. With that situation, Quikr can buy some time now to improve the healthy part of the business, and from this point in time, increase the valuation rather than the other way around,” the company said in the analyst call.