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Kaustubh Katdare
Kaustubh Katdare • Jul 10, 2013

Flipkart Funding Update : $200 Million More From Existing Investors!

Flipkart has raised another $200 million from their existing investors, making it the single largest round of funding by any of the e-Commerce companies in India. The investors who participated in the fund raising are MIH (part of Naspers, South Africa), Tiger Global, Accel Partners and Iconiq Capital. The latest round is the fifth found of funding from Flipkart and it comes at a time when the entire e-Commerce industry is struggling to acquire customers, manage their operations on a limited budget and keep growing. The costs of operations have gone up in the recent times and there are several regulatory pressures on each eCommerce player in India.

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Sachin Bansal, the founder and CEO of Flipkart has said that there was a lot of skepticism about Flipkart and the overall e-Commerce in India. The latest round of funding by Flipkart refuses that. The founder team sees the latest funding as a 'great validation'.

Flipkart has raised a total of $380 million from investors, which amounts to Rs. 2280 crores. The company says that the latest funds will be invested in improving the supply chain, automation and making new hires.

Flipkart's Funding History

Flipkart's first ever funds came from the pockets of its founders: Sachin Bansal and Binny Bansal who invested a sum of Rs. 4,00,000 from their own savings. That was year 2007. Since then, the company raised about $1 million from Accel India (in 2009), about 10 million in 2010 from Tiger Global and again about $20 million in June 2012.

The fourth round of funding happened on August 24, 2012 in which the company raised about $150 million from MIH and ICONIQ Capital.

The company invested the capital in making a few key purchases. In 2010, the company acquired 'WeRead' which was a popular social book discovery tool, followed by the acquisition of Mime360 in 2011 - which allowed the company to offer the Flyte Digital Store. Unfortunately, the company shut down the Flyte Digital Store last month stating that the Indian eCommerce markets aren't yet ready for the digital music purchases. The company had also acquired Chakpak which offered a wide range of updates/news/photos and videos from Bollywood.

A key acquisition in 2012 was the take over of direct competitor - LetsBuy.com which was struggling with supply-chain and customer support services. The company closed down the brand and diverted all of LetsBuy's traffic to its own flagship portal.

The Competition Is Fierce!

The Indian eCommerce industry is going through very interesting times. With the arrival of Amazon, people are expecting a head to head competition with Flipkart. Amazon, so far, has been very selective in launching the product categories and has already tasted the Indian markets with Junglee.com - which they announced several months ago. Flipkart, which sells a whooping 20 products a minute is already projecting sales of about 10 billion rupees in 2014. It however looks like the company is still struggling with profit margins.

There were rumours that if Flipkart does not raise funds before November this year, the company would go out of business. If those were true, the latest found of fundraising would definitely add more oxygen to Flipkart's cylinders.

We recently reported that Flipkart's making foray into online payment gateways to make sure that they can use their current infrastructure to grow the revenues with PayZippy. The service will allow Flipkart a chance to be the de-facto payment systems to be used for every transaction that happens online.

We think Flipkart's either getting ready to play it big (read: float an IPO in the next 2-3 years) or just ensuring that they're a great acquisition target for a bigger eCommerce player (read Amazon). Do let us know what you think!
Kaustubh Katdare
Kaustubh Katdare • Jul 10, 2013
Obtained few more interesting stats from the Internet. I'm not sure if they're correct; but good to entertain yourself: The total number of registered users on Flipkart is about 96,00,000 and the site receives ~10,00,000 (one million) unique visitors a day. In June 2013; Flipkart shipped about 1,30,000 products every day! Boy o Boy, that's totally awesome!
Anoop Mathew
Anoop Mathew • Jul 10, 2013
Kaustubh Katdare
Obtained few more interesting stats from the Internet. I'm not sure if they're correct; but good to entertain yourself: The total number of registered users on Flipkart is about 96,00,000 and the site receives ~10,00,000 (one million) unique visitors a day. In June 2013; Flipkart shipped about 1,30,000 products every day! Boy o Boy, that's totally awesome!
I want to like this but it's not available here! Superb! Hats off to the stats! I guess the quality of service is also good as said by customers!
Kaustubh Katdare
Kaustubh Katdare • Jul 10, 2013
Well, I'm little taken aback by the news. Flipkart by now shouldn't have had to raise the funds to expand its operations. I think the profit margins they have are very small to really fund the growth of the business. It could be because the competition from the rivals is very fierce and 'huge discounts' was one of the primary catalysts of bringing people to shop online. The markets in India work very differently from the US or the UK.

Even if Flipkart offers IPO, I'm still worried about the long term success of the company. Unless the business makes a ton of profits; it really can't survive on the borrowed money for long time. They'll have to wait for improving the profit margins. It'd be interesting to see how!
Amazed by the moves by flipkart.
Definitely flipkart is going to have a tough battle with online shopping services like amazon,junglee,etc.But flipkart have an edge over it.But the fact I hate is minimum shipping charge .
RajeshCDCA
RajeshCDCA • Jul 11, 2013
So the Big got bigger , hope service will also get better!!
Kaustubh Katdare
Well, I'm little taken aback by the news. Flipkart by now shouldn't have had to raise the funds to expand its operations. I think the profit margins they have are very small to really fund the growth of the business. It could be because the competition from the rivals is very fierce and 'huge discounts' was one of the primary catalysts of bringing people to shop online. The markets in India work very differently from the US or the UK.

Even if Flipkart offers IPO, I'm still worried about the long term success of the company. Unless the business makes a ton of profits; it really can't survive on the borrowed money for long time. They'll have to wait for improving the profit margins. It'd be interesting to see how!
Flipkart seems to have gone through some issues regarding account reporting and laid off employees. Probably is going through a tough pinch now and needs the funds.
Hari Rastogi
Hari Rastogi • Oct 12, 2013
Action must be taken by competition Commission of India or by some govt outfit against the online retailers who are using flaw in the law and playing a big GAMBLE to capture the entire market by selling below cost price for their initial years. When VC funding is not allowed in E-commerce these companies are registering offices in Singapore etc and routing the money for the same business. Is it not a mockery of our system ? when VC funding in retail is not allowed their is a daily news of $XX million funding to so and so e-commerce company. DUH! they are obviously not using funding just for their platform but to run business in losses to kill competitors and physical retailers.

It's like one sided competition by misusing the VC funding to sell below cost price and with huge operating losses by these handful of online retailers...

-Hari Rastogi
A common retailer
A faculty Member of B schools,
A patriot
Kaustubh Katdare
Kaustubh Katdare • Oct 12, 2013
@Hari Rastogi - You've raised very valid points. I think Flipkart got registered in Singapore to keep the cash flow moving. Well, it is the mockery of the system; but I'd not blame them. The Government intentionally sets laws so that there are loopholes to be exploited.

Flipkart's pricing was discussed on CE. Do check it out!
Anand Tamariya
Anand Tamariya • Oct 13, 2013
Hari Rastogi
Action must be taken by competition Commission of India or by some govt outfit against the online retailers who are using flaw in the law and playing a big GAMBLE to capture the entire market by selling below cost price for their initial years. When VC funding is not allowed in E-commerce these companies are registering offices in Singapore etc and routing the money for the same business. Is it not a mockery of our system ? when VC funding in retail is not allowed their is a daily news of $XX million funding to so and so e-commerce company. DUH! they are obviously not using funding just for their platform but to run business in losses to kill competitors and physical retailers.

It's like one sided competition by misusing the VC funding to sell below cost price and with huge operating losses by these handful of online retailers...

-Hari Rastogi
A common retailer
A faculty Member of B schools,
A patriot
I don't think you need to worry about companies with flawed biz model - it's simply not sustainable. They may make headlines today. They may talk about going public - but who will buy the stocks? There's a lesson to be learnt from Facebook IPO. In the long run, only businesses which make profit will survive.
Kaustubh Katdare
Kaustubh Katdare • Oct 13, 2013
I'm quite sure that Flipkart's strategy to please their investors is to sell the company to Amazon for about a billion dollars. If that happens, I'll feel sorry for the mindset of the Indian companies. We need companies that run like Tata & Reliance.
Anand Tamariya
Anand Tamariya • Oct 13, 2013
Well, they have already sold the company. Why do you think VCs invest in a company? For a percentage of ownership in the company. I won't be surprised if the founders have less than 10% of shares in the company now.

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