As per a report, with this funding, Flipkart’s largest investor Tiger Global Management has got a partial exit
Bangalore-based e-commerce marketplace Flipkart today announced that it has raised a new round of funding from SoftBank Vision Fund, the Japanese internet giant’s recently-launched US$100 billion VC fund.
This development comes a few days after its smaller rival Snapdeal, which is also a SoftBank portfolio company and its largest investor, called off a merger deal with Flipkart.
While the size of the funding has not been officially disclosed, an ET report has pegged the amount at US$2.5-2.6 billion, which makes the Japanese internet conglomerate the largest investor in Flipkart. The new investment at Flipkart is a mix of primary and secondary capital, as per a statement.
The new investment is part of Flipkart’s recent round of funding which started with a US$1.4 billion from Tencent, eBay and Microsoft.
As per this report, the deal will give Flipkart’s largest investor Tiger Global a partial exit.
Flipkart will now have over US$4 billion of cash on its balance sheet.
“This is a landmark deal for Flipkart and for India as it endorses our tech prowess, our innovative mindset and the potential we have to disrupt traditional markets. It is a resounding acknowledgement that the homegrown tech ecosystem is indeed thriving and succeeding in solving genuine problems in people’s daily lives across all of India,” Flipkart founders Sachin Bansal and Binny Bansal said in a joint statement.
SoftBank’s Son said: “India is a land of vast opportunity. We want to support innovative companies that are clear winners in India because they are best positioned to leverage technology and help people lead better lives. As the pioneers in Indian e-commerce, Flipkart is doing that every day.”
What is next for Flipkart?
Flipkart enjoyed an invincible run until Amazon expanded to India in 2012. Since then it has been locked in a bitter battle and has lost ground to the US e-commerce giant. Amazon acquired signifiant marketshare and tens of thousands of consumers through a systematic marketing strategy and by offering better user experience and services. Amazon’s marauding run also affected Snapdeal and it pushed the Noida-based marketplace to the verge of a collapse.
Once the poster boy of the Indian startup ecosystem, Flipkart’s journey in the past two years has not been that good.The firm saw its valuation being slashed by its minority investor Morgan Stanley several times in 2016. The e-commerce firm came under severe attack from industry people after news reports suggested it paid unreasonable salaries to some of its top employees, that even its close rival and global e-commerce major Amazon did not pay.
But things began to change when Kalyan Krishnamurthy (Managing Director of Tiger Global Management) came in a as its CEO early this year. Under his leadership, the company started showing signs of a turnaround. Krishnamurthy slowly got into action, tightened purse strings, and began to pull the strings. Under his leadership, the company won back the confidence of customers, industry, investors, and other stakeholders. A few months later into his anointment, the company struck a deal with eBay India, Microsoft and Tencent. The deal with SoftBank is another golden feather in his cap.
Obviously, SoftBank’s investment is a morale booster for Flipkart, which now has a huge war-chest to take Amazon head on. Getting a huge round of funding from the largest investor of its smaller rival is a shot in the arm. With a massive cash reserve, it can now look to significantly improve its customer experience, and make the supply chain more efficient. This funding will also help it introduce advanced technologies like warehouse robots and delivery drones. Plus, it could look to acquire Snapdeal in near future, which will help the e-commerce firm to further penetrate into the north and northeast market, where Snapdeal is stronger than its peers.
A brief history of Flipkart
Flipkart was started in 2007 by former Amazon colleagues Sachin Bansal and Binny Bansal (they are not related). The company later added other products into its kitty, including electronics, apparels, and furniture. In 2009, it raised its first major round of US$1 million in funding in 2013 from Accel Partners.
In 2013, the firm pivoted to a pure-play marketplace model. Over its course of its 10 years of existence, Flipkart has raised US$4.6 billion from marquee investors, including Naspers, DTS Global, Morgan Stanley, and Qatar Investment Authority, to name a few. It has also acquired nine companies, including leading fashion e-tailer Myntra, eBay India, Letsbuy, ngpay, and MapMyIndia.
Who is SoftBank Vision Fund?
Launched in October last year, SoftBank Vision Fund invests globally in the businesses and technologies that will enable the next stage of the Information Revolution. The Fund will enable long-term, large-scale investments to fund growth in the technology sector, investing up to US$100 billion over the next five years. The fund will invest through minority stake, majority stake and public equity investments of US$100 million or more. It will aim for a minimum investment horizon of ten years, providing businesses with a committed partner for long term growth.
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