India’s e-commerce poster boy Flipkart has completed a $1 Billion fund raise. The company is reportedly planning to go ahead with another round of similar magnitude. Apparently, it is hoping to use the newly generated funds in its coffers to take upon competition as it struggles to remain on the top in an increasingly competitive market.
Flipkart completed its latest round of funding on Friday, with a valuation of $10 Billion. While successive fund-raises usually see the net valuation of a company go up, Flipkart’s value is still far, far lower than the $15.5 billion peak it had achieved in 2015. This in spite of the fact that the round saw participating from all sorts of bigwigs including Microsoft Corp., EBay and China’s Tencent.
The news comes from Bloomberg, which cites certain people familiar with the matter. The news is important in the current scenario which sees Flipkart struggling against rivals like Amazon. The latter has been laying a lot of focus on its India operations with an eye towards expanding its presence. Towards that end, it is bringing the power of its resources to bear and that has brought all domestic players into a state of disarray.
Flipkart’s troubles are not exactly new. The company has been facing problems at various levels. Only last summer, one of Flipkart’s largest investor Tiger Global, sent in Kalyan Krishnamurthy one of its own executives to take over the CEO-ship of the firm. As things stand now, both of the company’s founders are in roles that are of lesser import with regards to the day to day functioning of Flipkart.
Meanwhile, we are seeing all of the stakeholders either rolling back operations or in Amazon’s case, expanding their presence massively. Amazon has pledged to spend $5 billion on its India operations over the next few years. Similarly, Paytm (which has Alibaba as its chief backer) is also doubling down on its business operations.
It will be interesting to see how the e-commerce behemoth leverages its funding this time around. Traditionally, e-commerce companies in the country have opted to use funds to offer discounts and and other schemes with an intent to lure more customers. However, the most these schemes seem to have achieved, is having made investors cautious towards putting in money.
Flipkart does not seem to have any dearth of investors, despite having its value marked down several times over the past couple of years. Let’s see what kind of strategy it embarks upon this time around.