Flipkart has been looking to a raise a fresh round of capital for quite some time, but nothing has materialized so far. Now, the company is again making headlines as it is said to be in talks to finally add funds to its coffers. As per reports, Flipkart is in talks with Microsoft, and others to raise a mammoth $1.5 billion funding round.
As per people aware of the matter, Flipkart is in talks with several companies, including Microsoft Corp., eBay Inc., PayPal Holdings Inc. and Tencent Holdings Ltd for a fundraising round. It is also in talks with Google Capital for the funding round. The e-commerce giant is trying to raise new funds at a valuation of $10-12 billion. If everything works out as planned, then the investment is expected to close within 3 weeks.
We are not sure how the company is planning to raise funding from eBay as the company is also a strategic investor in Flipkart’s rival Snapdeal. But then, Flipkart’s current CEO Kalyan Krishnamurthy worked at eBay for nearly seven years in a finance role.
Earlier, the company was planning to raise funds somewhere between $500 million to $1 billion. However, it has increased the size of its funding round after its turnaround under new chief executive Kalyan Krishnamurthy.
The pre-money valuation of Flipkart for this new funding round is said to be estimated at $10-12 billion, which is quite lower than the company’s previous valuation of $15 billion. But it would still represent a coup for Flipkart, as it has seen its valuation cut by up to 60 percent by five of its own investors.
This development comes after Flipkart and Microsoft announced a strategic cloud partnership earlier this week, under which, Flipkart will start adopting Microsoft Azure as its exclusive public cloud platform.
It has been more than 18 months since the company has raised a funding round. It last raised funding around 18 months ago when its existing investors poured in $700 million, at a valuation of $15 million. The round was led by Tiger Global Management.
While the company is trying to raise a fresh funding round worth $1.5 million, nothing is finalized as of yet. The company may lose the interest of potential investors because of the valuation they might put forward. Earlier, the company has seen many investors walk-out due to the company’s high valuation.
Flipkart was earlier said to be in talks with Chinese e-commerce giant Alibaba, as well as world’s largest retailer — Walmart. However, things didn’t go as planned for the company, and ultimately, the deal didn’t materialize.
One of the major reasons for Flipkart not being able to raise funding is its valuation, which has taken a significant hit. From its several valuation markdowns, the lowest of them values the company at just $5.56 billion — a drastic cut from its previous valuation.
However, the company has seen a lot of positive changes recently. It recently sold a small stake to media firm Bennett, Coleman, and Co. Ltd (BCCL) for Rs 260 crore. This transaction, that has an additional component of advertising space for Flipkart in BCCL’s media properties, valued Flipkart at roughly $15 billion.
We’ve contacted Flipkart as well as others involved for more information on these speculations and will update you once we hear back from them.