Having raised $50 million across multiple rounds of funding, the Mumbai and New Jersey-based firm will shut the Loginext brand and move all its client contracts to Stellation, per a July 8 board resolution.
The asset sale includes Loginext’s software, hardware, all its subsidiaries, customers, and vendor contracts.
“It was noted that the amount to be distributed to the stockholders was not expected to exceed the amount of the aggregate liquidation preference of the company’s preferred stock and, as a result, it was not expected that any of the company’s remaining assets would be distributed to the holders of the company’s common stock,” the resolution passed by the board said.
Loginext, which too is registered in Delaware, has returned a total of around $8-9 million from its reserves to Tiger and Steadview. The company has put aside another $2 million as working capital.
“All the contracts will now be under the entity name Stellation,” a person in the know said.
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The development also indicates the stress in the SaaS market which peaked during the Covid-19 pandemic.
ETtechFounded in 2014 by Carnegie Mellon University batchmates Dhruvil Sanghvi and Manisha Raisinghani, Loginext offers software products to automate deliveries across the supply chain for retail, ecommerce, consumer packaged goods, and food and beverages sectors. Its clients include KFC, Pizza Hut, Starbucks, Burger King and McDonald’s, among others.
In 2020, Loginext raised its largest funding of $39 million led by Tiger Global and Steadview in a round valuing it at $100 million.
When contacted by ET, Loginext’s Sanghvi said, “The company has been growing and the numbers and statements mentioned are incorrect. All of the clients and employees are operational and a vast majority of such clients are outside India, including a large portion coming from the US. There are no layoffs. LogiNext and its shareholders would like to withhold from commenting on any private matters, transactions and structures of the company.”
Spokespersons for Tiger Global and Steadview did not respond to ET’s queries until press time Thursday.
Chinese ecommerce giant Alibaba and Paytm had also invested in the firm in the early years but sold their stakes during the 2020 fundraise.
Acquiring liabilities
At its last board meeting, Tiger Global, which owned around 50% in Loginext, Steadview and Sanghvi were in favour of the sale while Raisinghani was opposed to the offer as she believed that the company could obtain a higher price, as per a document chronicling the details of the meeting.
As the acquirer was assuming the company’s liabilities, shareholders were supportive of the transaction, people familiar with the matter said.
“It’s hard to shut down a SaaS company as there are multiple contracts with clients who can go legal.. this deal means the liabilities get transferred to the entity which is acquiring Loginext… Investors basically wanted out with whatever little capital they managed getting back instead of it going to zero..,” said another person privy to the developments.
“The entire logistics SaaS sector went through a very rough period post Covid-19,” one of the persons in the know said. “As for Loginext, it was unable to scale and there were other issues like one of the founders leaving the company.”
Raisinghani, who was the chief technology officer, left Loginext in 2021 and last year, she set up SiftHub, an artificial intelligence-enabled platform for enterprise sales teams. The startup raised $5.5 million from Z47 (formerly Matrix Partners) and Blume Ventures in April this year.
“The company was growing till a couple of years ago, but then it started to stagnate… Besides one of the founders (Raisinghani), other top executives have also been leaving the company for the last one year,” the person cited above said. “Despite the churn, the company bulked up and hit a peak of around 270 employees… Typically, companies hire more when the business is growing, but in this case, it was the opposite.”
According to the documents seen by ET, Loginext Solutions Inc had total assets worth $16 million as of April 2024 while its liabilities stood at nearly $6 million.
Other players in the sector include Fireye, backed by Elevation Capital, and Lightspeed-funded Freight Tiger, among others.