flipkart funding rounds

The poster boy of Indian eCommerce industry, Flipkart has raised $1.4 billion from some of the tech majors, including Microsoft and Tencent. This is the largest round of funding ever raised by any Indian startup till date. The major highlights of this rounds, besides Microsoft and Chinese major Tencent participation, is the acquisition of eBay India by Flipkart. The Indian e-commerce major has agreed to acquire eBay India in exchange for equity and cash investment.

With the fresh round of funding, the valuation of Flipkart has soared to $11.6 billion from the speculated valuation of less than $10 billion in the last few months. The new valuation, however, is way lesser than $15.2 billion Flipkart was valued at while raising $700 million in 2015.

After raising $1.4 billion in the latest round, Flipkart raised $4.55 billion in total till date.

The participation of eBay and Microsoft is considered as a strategic move. The acquisition of eBay India has helped eBay to put the struggling arm of its business in India under the safe zone. On the other hand, Microsoft got a better deal by onboarding Flipkart on Azure. In spite of Flipkart acquiring eBay India, the latter one will continue as an independent entity.

“This shows that once valuations are corrected, there is enough money in the market to raise funds for Indian internet companies,” said Arvind Singhal, chairman and managing director of Technopak, a retail consultancy.

After the acqu-fund deal, there are two aspects that have emerged clearly:

  • The consolidation and correction in the eCommerce industry have started.
  • The price war between Flipkart and Amazon will continue for a longer duration now.

In June last year, Jeff Bezos fueled the fire after announcing $5 billion investment in Amazon India to keep the war going for the next few years. The latest round of funding will help Flipkart to build a war chest, especially after the market consolidation. If things fall in favour of Softbank, Flipkart will soon acquire Snapdeal to control the biggest chunk of Indian e-commerce market. The possible acquisition will also help Flipkart to foray into highly promising wallet business and add up new revenue arm by getting Freecharge under the umbrella.