India’s Flipkart raises $200m from VC backers
Online retailer Flipkart has raised $200 million (INR12 billion) from existing investors Accel Partners, Tiger Global, Iconiq Capital and Naspers, in one of the largest fundraising rounds for an Indian e-commerce player. This fifth round brings the total raised by the Indian company to over $380 million.
The deal is reported to value the company at $1.5 billion. It was valued at $850-900 million when it raised $150 million from the same investors last year.
The funding comes as increased competition and high operating costs have forced a change of strategy at Flipkart. The company has also fired staff and shuttered both its Delhi office and digital music download business Flyte.
"There have recently been a lot of skeptics in the media and in business circles who have questioned - rightly so - whether e-commerce is healthy and whether Flipkart is running the way it should be, whether it has the right strategy. This event should put those questions to rest," Flipkart CEO Sachin Bansal told LiveMint.
The latest round of funding will be used to develop technology capabilities, logistics and mobile commerce. Last week, Flipkart launched its own payment gateway that can handle card payments for domestic merchant websites and mobile sites.
There has been a wave of consolidation as e-commerce websites struggle with high operating costs. Of the 193 such websites that were operational in October 2012, 89 have either shut down or merged with other retailers, according to data compiled by Microsoft's India Accelerator program.
Larger firms such as Flipkart, Snapdeal and Myntra have received further capital while smaller firms such as Shopo, acquired by Snapdeal, have failed to raise funds.
Earlier this year, Flipkart switched from online retail to become a marketplace where third-party suppliers and merchants, rather than Flipkart itself, bear the cost of inventory and storage in selling products to shoppers. The firm claims to have over 500 suppliers.
The move also allows foreign direct investment, which is not permitted in multibrand online retail. Amazon and eBay follow the marketplace model in India, although Amazon handles most inventory and storage itself in other parts of the world.
Flipkart said it carries out transactions worth $500 million annually and currently has 9.6 million registered users.
More on South Asia
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.