Homegrown e-commerce major Flipkart has reportedly completed a fundraising round, raising up to $1 billion (nearly Rs 6,652.75 crore) on Friday, a report by Bloomberg said. The funds will be used to fight competition in an aggressive domestic market where e-commerce companies are neck-to-neck to gain market share.
According to the report citing unnamed sources, Flipkart raised a billion dollars at valuation of $10 billion (nearly Rs 66,527.5 crore), down from the earlier $15.5 billion (nearly Rs 1.03 lakh crore in 2015).
“That Flipkart will get funded was never in doubt. The valuation of $10 billion is nothing to worry about, the funding environment is rather slow globally,” Satish Meena, Delhi-based senior forecast analyst at Forrester Research told Bloomberg.
Flipkart's latest round of investors include - Microsoft Corp, EBay Inc, and Tencent Holdings. The e-commerce company refused to comment on "market speculations", as it called it.
The e-commerce company is reportedly looking to raise a billion more to tackle Snapdeal - which is chalking out a stronger business model to revive growth and hit profitability in two years - and Amazon - which has pledged $5 billion to scale up India operations.
Snapdeal - backed by Japan's Softbank - recently onboarded e-commerce veteran Kabir Mishra to the Board as it undertakes several steps, including lay offs and moving away from non-core activities to achieve better returns. "As part of the revival plan, the company will reorganise into "a lean, focussed and entrepreneurial one" by combining teams, reducing layers, eliminating non-core projects and strengthening focus on profitable growth." a PTI report said.
Earlier this year, Tiger Global Management, which backs Flipkart, picked Kalyan Krishnamurthy to become the e-commerce company's chief executive officer while bringing all its units under an umbrella firm and elevating Binny Bansal as the Group Chief Executive Officer.
"Flipkart Group Organisation will focus on building a portfolio of new, high value-creating businesses that are disruptive and will transform commerce in India," the company had said in a statement at the time.
"The latest fundraising shows investors believe Flipkart has a good chance of beating back the competition, despite a current dismal environment for capital-raising and the startup’s own internal ructions," Bloomberg said.
Now, with Paytm in the fray too with the Paytm Mall, the competition is only likely to get more intense hereon.
Flipkart will have to persuade investors to inject still more capital if it’s to counter its deep-pocketed rivals, said the report, by providing cut-throat discounts, quicker deliveries, and better customer service.
"The new funds put Flipkart in a strong position and this year’s going to be a direct face-off between Amazon and Flipkart,” Meena said. “Paytm is still trying to build itself up to scale,” according to the report.
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