E-commerce marketplace Flipkart has raised $1 billion in fresh funding from China-based Internet firm Tencent with participation from Microsoft, according to this Business Standard report. The report quoted unnamed sources who told the publication that the new round of funding was based on a valuation of $11 billion, down significantly from the previous valuation of $15 billion. The company has not disclosed the investment publicly; In a statement to MediaNama’s emailed queries, a spokesperson from Flipkart responded saying “as a company policy, we do not comment on market speculations.”
Apart from this, Flipkart is also in talks with e-commerce major eBay for a potential merger deal involving its India operations; the company is also looking to raise an additional $500 million investment from eBay, the report added. Note that Flipkart’s rival Snapdeal had earlier sold a minority stake to eBay for an undisclosed amount in 2013. In August 2015 eBay sold a partial stake in Snapdeal to focus on its India operations.
Flipkart financials and funding
The speculated funding from Tencent and Microsoft also comes at a time when Flipkart is going through a rather rough time. It has seen some major rejigs on it executive level management with the appointment of Tiger Global’s Kalyan Krishnamuthy as new CEO, who replaced co-founder and CEO Binny Bansal. In its India operations, Flipkart posted losses of Rs 5,223 during FY16, which is the highest comparing to the three e-commerce companies (Snapdeal and Amazon) that operate in the country, according to this Moneycontrol report. If the speculated fund raise is true, the amount of total funding raised by Flipkart would surpass $4 billion. In its previous round in September 2015, Flipkart raised $700 million from a clutch of investors, taking the overall funding to about $3.2 billion, in over 12 rounds of funding.
Flipkart also has been shutting down multiple services/units in the since 2015 to save up cash:
-In February, it suspended consumer-facing courier service Ekart Courier service, after nine months of operations
–In February 2016, it shut down its grocery delivery service ‘Nearby’ just five months after its launch in October 2015.
–In December 2015, it exited its e-books business saying that the division was not a strategic fit for the company.
Competition in e-commerce sector
Flipkart’s rival Amazon India, on the other hand, posted Rs 3,572 crore in losses during FY16, up from Rs 1,724 crore in the previous financial year, according to Mint. Amazon has also invested heavily into India operations, with its overall investment touching Rs 7,000 crore during FY16. It also recently launched its Prime Video streaming platform in India. Apart from this, Snapdeal is said to be in talks with Chinese giant Alibaba for a buyout deal, although it is also a major investor in Paytm.