Exclusive: Shop101 in talks for acquisition with Reliance, Amazon and others

Social commerce startup Shop101 is in early-stage talks with Reliance and Amazon for a potential acquisition, said three people with direct knowledge of the development. The talks have surfaced at a time when the six-year-old firm is finding it tough to raise external capital.

“Shop101 has been in talks with Reliance and Amazon to discuss acquisition possibilities for the past few months. Given the rise in scale of segment leader Meesho, Shop101 has been struggling to rope in new investors,” said one of the sources aware of the details requesting anonymity as the talks are private.

Shop101 had last raised Rs 17.2 crore or $2.5 million in July 2020 from existing investors Kalaari Capital, VY Capital, Unilever and Stellaris Venture Partners. 

According to sources, the company may also be in talks with other suitors. To be sure, all these talks are preliminary and may not even materialize into a deal. 

Queries sent to Shop101 and its backers Stellaris and Kalaari on Saturday did not elicit a response. We’ll update the story in case they do.

A Reliance spokesperson said that “as a policy, we do not comment on media speculation and rumours. Our company evaluates various opportunities on an ongoing basis.” 

An Amazon spokesperson said that “we do not comment on speculation about what we may or may not do in future.”

In case of a deal with Reliance, Shop101 will become another Kalaari Capital-backed firm to have been acquired by the Mukesh Ambani-led firm. Till date, Reliance has acquired four of Kalaari’s portfolio companies - Embibe, Zivame, Haptik and Urban Ladder - and is in its last leg to acquire subscription commerce platform Milkbasket. 

It’s worth noting that Reliance is the anchor limited partner in Kalaari’s fourth fund. According to an ET report, Reliance has committed $100 million for the fourth fund and it will infuse another $100 million in the next 12 months.

The second source cited above further said that if the acquisition goes through, “it’s likely to take place with a significant haircut in valuation.” According to Fintrackr’s estimate, Shop101 was valued at around $60 million during its bridge round from existing backers in July of 2020.

Shop101’s download numbers don’t paint a rosy picture too. According to Sensor Tower data, Shop101 received less than 1 million app downloads between December 25 and March 25. It has registered a little over 10 million downloads since its inception. In comparison, Meesho has over 25 million app downloads in the past three months and has amassed over 84 million downloads to date.