India’s largest ecommerce platform and one of the most valuable companies produced by the country, Flipkart, may be rolling up its sleeves for some serious fundraising again. The company, which has already raised in excess of $3 Billion, is = trying to raise somewhere in the neighborhoods of $1 Billion this time around, reports Techcrunch.
The company is apparently looking to pick up a $1 Billion investment. However, the erstwhile apple of the investors’ eye is finding things a little bit more difficult. That being said though, there is no dearth of investors for Flipkart — its basically the poster boy of the Indian E-commerce landscape, after all . However, inspired by Morgan Stanley, investors are only willing to do so at a somewhat lower price.
Lets put it this way: The last time Flipakrt raised money, it was valued at $15 Billion. However, now investors ruminating about putting money into the company are looking to do so at a lesser valuation.
What this means for Flipkart is that it will have to let go of more equity in return of the same amount of money — understandably, not a prospect any company would like.
One of the potential money pumpers in the company may be Chinese giant Alibaba, which is flush with money at the moment — courtesy a $3Billion loan it just raised — and is also known to be an avid
investor in both India and e-commerce. Indeed, the company holds significant stakes in Flipkart’s archrival Snapdeal as well as Paytm, and was rumored to be in talks with Flipkart too.
However, it seems like Alibaba has been affected by the recent upheavals as well, and a rumored meeting between representatives of the company with Flipkart officials hovered around the same topic —
namely, a mark down in the price of the stakes.
And then there is speculation that investors are basing their future investments on Flipkart valuation of a meagre $7 Billion. However, that sounds simply too far-fetched to be true — but, a mark down in
its valuation in this round of fundraising may be very likely, thanks to Morgan Stanley setting the precedent.
The company is all probability, wont turn up its nose at the prospect of a downround. Although it has been doing a roaring business and has turned into a massive enterprise, the company is still not at the
point where it is self sustainable and profitable. What’s more, it’s been quite busy making investments of its own along with getting into new ventures such as the recently launched digital wallet while also
putting in money into its various enterprises.
While setting up various enterprises definitely pays — eventually — all these things require cash, a lot of it. That is why Flipkart may just go with a down round in order to raise money. If so, it will more
be a question of which investor manages to offer it the best terms — although, even the best is likely to be somewhat less than its $15 Billion valuation of last year, that saw it raise $700 million. That is already $11 Billion now, so yeah.
However, businesses have their phases and Flipkart has taken some damage from the Morgan Stanley markdown, which came at a time when it was stretched pretty thin. That said though, the company is still the poster boy of Indian e-commerce, and a boost — in form of a sturdy, $1 Billion investment — may just be what is needed to get the company back on track again .