Flipkart raises $1.4 billion from Tencent, eBay, Microsoft
Flipkart raises the biggest startup funding of $1.4 billion from Tencent, Microsoft and eBay, to take on rival Amazon, and it might also use the money to buy Snapdeal.
On Monday, Flipkart, the country’s largest e-commerce conglomerate announced $1.4 billion funding from WeChat-investor Tencent, Microsoft and eBay, at $11.6 billion post-transaction valuation.
“We are delighted that Tencent, eBay and Microsoft — all innovation powerhouses — have chosen to partner with us on their India journey,” said Sachin Bansal and Binny Bansal, Founders of Flipkart, in a company statement.
Sachin separately tweeted that the funding was an “infusion of synergies”, and it was a “giant leap in India’s e-commerce”.
The two founders also said that the new investors were chosen based on their long histories of “pioneering industries, and the unique expertise and insights each of them bring to Flipkart.”
Through this deal, Flipkart wants to fast track its technology transformation, the Bansals said.
eBay’s investment comes is “strategic commercial agreement”, where the American e-commerce firm known to pioneer online auctions will sell its local business to Flipkart, but will continue to operate as an independent firm.
Flipkart has done this in the past, with online apparel companies, Myntra and Jabong. “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,” said Devin Wenig, president and CEO of eBay Inc.
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.
FUNDING TIMELINE
Source: Company
The fund raising, if rumours are to be believed, will also help Flipkart in acquiring Snapdeal, which will make the joint entity much bigger than its rival Amazon, which is giving the Indian e-commerce firms a tough time.
Amazon’s founder and CEO Jeff Bezos has already committed $5 billion to build the local business, after its failure in China. The reasons are simple -- India is the second largest internet market after China, and has surpassed America.
For Tencent, India is a big opportunity, after its success in China with WeChat, which is known for its network effect. WeChat offers everything from cabs to laundry services, and from grocery to electronics on its platform. With its investment in Flipkart, Tencent can aim at building similar service in India.
“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,” said Martin Lau, president, Tencent.
That would bring Flipkart in direct competition with Paytm, which aims to build a WeChat-like model in India. The companies have so far stayed away from direct competition, as Flipkart focussed on product marketplace, while Paytm focusses on digital marketplace and financial services.
While the Flipkart’s Bansals have made no official statements on a pivot or expansion of other services, it would not be wrong to assume that the company would move in that direction.
After all Flipkart has PhonePe, which is a UPI-based app that provides a cashless and seamless payment experience.
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