Flipkart previously made headlines for being plagued with troubles — valuation markdowns, management exodus and a fundraising crunch but now everything is turning out to be positive for the e-tailer. Just two weeks after the company raised about $1 billion in a fresh funding round, Flipkart is again all-set to raise another $1.2 billion to $1.5 billion in a new round. The new capital infusion will provide Flipkart the much needed boost in its fight against Amazon for the pole position of India’s e-commerce market.
It is being reported that the funding will be raised from Tencent Holdings Ltd, Microsoft Corp. and eBay Inc. People aware of the development said that Flipkart will get a pre-money valuation of $10 billion in this round, which is expected to close next week. When the round closes, it could be the largest ever fundraising by an Indian start-up.
Apart from this, the company is said to be in talks with Japan-based SoftBank for the acquisition or merger of Snapdeal — another homegrown e-commerce startup. Further, the company is said to be in talks for buying out eBay India’s operations as well, but it may take more time to materialize.
Even after scoring a hefty $1.5 billion, the company may not close the round and keep it open in case more investors are interested to invest in the startup. A person aware of the development says that if Flipkart ends up acquiring rival Snapdeal, SoftBank will also invest more cash in the company.
If Snapdeal gets acquired by Flipkart, the company’s largest shareholder — Tiger Global Management is expected to sell a significant percentage of its stake to SoftBank. Notably, Tiger Global has pumped-in about $1 billion into Flipkart over the past eight years, and currently holds about 30-33% in the online retailer.
It will be interesting to see how the e-commerce company leverages its funding this time around. Earlier, e-commerce companies in the country opted to use funds to offer discounts to lure more customers which increased the company’s burn rates.
The primary competitor of Flipkart is, as you know it, U.S-based Amazon, which has been laying a lot of focus on its India operations with an eye on expanding its presence way further. Amazon has also committed to invest over $5 billion in the Indian unit, aiming for the big chunk of the e-commerce market.