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|Tiki burns totally $22 million from VNG|
The Vietnamese e-commerce playground was astonished by the merger between Tiki and Sendo, which took place after Tiki declared its plan to stage an initial public offering a few weeks ago. The two news have raised doubts over the e-commerce platform's ability to mobilise new investment to continue the “money burning” race after 10 years.
As of the end of 2018, its accumulated losses were about VND1.4 trillion ($60.87 million). Moreover, Tiki also burned through the entire VND506.3 billion ($22 million) capital of VNG – its largest shareholder with 24.6 per cent.
Otherwise, constantly welcoming new investments has fragmented the e-commerce platform’s shareholder structure. Tiki raised capital in June and December last year. Along with VNG, China-based JD.com is also its main shareholder with 21 per cent. The others include Ubiquitous Traders Pte., Ltd. (nearly 9 per cent), CyberAgent, STIC, and Sumitomo.
Tiki has not issued public communications or responded to queries about the deals.
To conquer the market, e-commerce players have been increasing capital and racking up deficits year after year to keep growing.
According to the latest statistics of security company VNDIRECT, each e-commerce company has to suffer a loss of VND124 billion ($5.4 million) to gain 1 per cent of market share from the competition.
Regarding its merger with Sendo, Nguyen Viet Hung, a key opinion leader with a hand in a number of local technology startups, said that the deal may be a good fit for the two local companies as e-commerce firms as it may not only eliminate one competitor but also create a new partnership with stronger financial potential to compete.
After the failure of WeWork, many investors are now focusing on the profitability of startups, instead of their growth potential. That may be the main reason behind Tiki has not been very attractive to investors. Forming alliances and proposing an IPO could both be meant as remedies for this.