Flipkart — the largest home-grown e-commerce marketplace, which went through a terrible times last year, is now paving way to become a leading player in the Indian e-commerce market this year.
The company has secured new funding round of $1.4 billion from some very well-known companies such as Microsoft, eBay and Tencent. It marks a significant victory for new Flipkart chief executive Kalyan Krishnamurthy, who has led the turnaround efforts at the online retailer after rejoining the company last June.
This new transaction values the Bengaluru-based startup at a whooping $11.6 billion. This valuation breaths a sigh of relief for many as the company, which was earlier valued at $15.2 billion, went as low as $5.37 billion last year during series of valuation markdowns from its investors.
In a statement, Sachin Bansal and Binny Bansal, co-founders of Flipkart, said, “We are delighted that Tencent, eBay and Microsoft — all innovation powerhouses — have chosen to partner with us on their India journey.” They further added that the new investors were chosen based on their history of “pioneering industries, and the unique expertise and insights each of them bring to Flipkart.”
What’s more interesting about this funding round is the part where eBay gets involved. eBay’s investment comes in as a “strategic commercial agreement”, where the American e-commerce firm will sell its local business to Flipkart, but will continue to operate as an independent firm.
Devin Wenig, president and CEO of eBay Inc., said,
The combination of eBay’s position as a leading global e-commerce company and Flipkart’s market stature will allow us to accelerate and maximize the opportunity for both companies in India.
The commercial agreement allows Flipkart to start become a global e-commerce company with cross-border trade arrangements. While Flipkart will get access to eBay’s global inventory, eBay’s customers will have access to Flipkart’s sellers.
Martin Lau, president, Tencent, said,
This strategic partnership enables Tencent to participate in the exciting opportunities in e-commerce and payments in India. We look forward to helping Flipkart to deliver compelling experiences to users throughout India, and to contribute to the development of the internet ecosystem there.
Going by the rumors, the funding will also be useful to the company which seems to be all set to acquire struggling rival Snapdeal for around $950 million in an all-stock deal. SoftBank — the Japan-based behemoth is pushing for the sale of Snapdeal and has even offered to buy out Snapdeal’s founders and other investors.
Also, the newly raised funding will give the much needed boost to Flipkart against its competition with Amazon India to be the leader of the Indian e-commerce market. Amazon India has already received commitment of $5 billion from Jeff Bezos.
Flipkart may get additional funding as soon as the deal for the acquisition of Snapdeal goes through. As per the reports, SoftBank may invest in Flipkart and buy out one-third shares of Tiger Global Management — the largest and early-stage investor of Flipkart.
Several sources aware of the development of Snapdeal sale process suggests that the deal could be announced by the end of this month. If it turns out to be true, it could be the biggest deal in the history of Indian startups.