Flipkart in talks with Google, others for next round of funding

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06-Jan-2017

 

Story Highlights

  • Flipkart has held talks with Google among several new investors for its next funding round, according to sources familiar to the development
  • It is expected to raise fresh capital of anywhere between the $10 billion to $15 billion range
  • Apart from Google, the talks with Walmart for funding are “not dead yet”, one of the sources said

India’s biggest e-commerce company, Flipkart, has held talks with Google among several new investors for its next funding round, two people familiar with the discussions told FactorDaily.

The talks are early and exploratory in nature, the two sources said separately.

From its last valuation of $15.1 billion during its July 2015 fund raise, Flipkart is expected to raise fresh capital in a down-round of anywhere between the $10 billion to $15 billion range, the person said.

“Where Flipkart is in terms of scale, cash burns and the opportunity, there’s scope to bring different set of investors like Google,” one of the persons said.

From its last valuation of $15.1 billion during its July 2015 fund raise, Flipkart is expected to raise fresh capital in a down-round of anywhere between the $10 billion to $15 billion range  

For Google, a foothold in India’s over $15 billion ecommerce market will help open a new battlefront against Amazon, Alibaba, and even Facebook. And for Flipkart, which has raised over $3 billion since it was founded by two former Amazon engineers, Sachin Bansal and Binny Bansal, getting a backer of Google’s stature will help immensely.

One of the people mentioned above said it’s still not clear whether Flipkart has been talking with Google’s corporate venture arm, CapitalG (earlier known as Google Capital) or with Google itself.

Already, Google has made several high profile global investments, including Uber, and three Indian startups — Freshdesk, Practo and Commonfloor.com.

Apart from Google, the talks with Walmart are “not dead yet”, the second person added. As we reported in September last year, Flipkart has held talks with Walmart for a strategic investment.

The key will be Flipkart’s valuation, as the company pushes its “turnaround story” forward under the new CEO Binny Bansal who took over from cofounder Sachin Bansal in January 2016. Former Tiger Global executive Kalyan Krishnamurthy too is at the centre of this turnaround as he oversees retail, business development, products and advertising.

The key will be Flipkart’s valuation, as the company pushes its “turnaround story” forward under the new CEO Binny Bansal who took over from cofounder Sachin Bansal in January 2016  

The last big funding for Flipkart happened in July 2015 when two of its existing investors — Tiger Global and Steadview Capital — pumped another $700 million in the company at around $15 billion valuation. Since then, Flipkart’s positioning as India’s most attractive startup investment for the biggest investors in the world has been weakening, thanks to a cut-throat rivalry with Amazon, apart from some of the company’s internal challenges. (Read: Flipkart needs to answer some existential questions in 2017.)

“The board is closely monitoring Flipkart’s health under the new management, and before June, there could be more top level changes,” the second person said.

A Flipkart spokesperson did not respond to an email query sent last Friday. A Google spokeswoman said the company does not comment on “rumours and speculations”.

Having raised $3.1 billion from over a dozen investors so far, Flipkart has had a rollercoaster ride during the past year. First, it struggled to maintain a lead over Amazon, thanks to some flipflops that included Flipkart’s “app-only” strategy. The move pushed away its loyal consumer base who were still buying on desktops. Later, investors and the board moved to replace Myntra founder Mukesh Bansal with Binny, and brought Krishnamurthy in to oversee the turnaround.

With Binny and Krishnamurthy at the helm, Flipkart has shown early signs of a revival, but the company is still far away from promising a path to profitability anytime soon. As we wrote last month, Flipkart’s revenues have grown, but the losses continue to mount.

And Amazon continues to put pressure on it by spending more on customer acquisition, apart from launching newer services such as Prime Video. Deep-pocketed Amazon, led by Jeff Bezos, has committed $5 billion to its Indian operations so far. Online retailing in India is widely considered the last frontier of e-commerce in the world and is predicted to grow to $60 billion in 2020 from around $15 billion today.


Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.


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