AVCJ Awards: Deal of the Year - Venture Capital: Flipkart

When Sachin Bansal and Binny Bansal quit their software engineering jobs at Amazon in 2007, they wanted to set up an online bookstore. Each contributed INR200,000 (about $3,229) to pay for a website and the following year they founded Flipkart Online Service.

Seven years later, the start-up has morphed into a diversified e-commerce platform offering everything from electronics, to apparel to sporting goods. Based on the $1 billion round raised earlier this year from a consortium led by Tiger Global Management and South African media company Naspers, Flipkart is thought to be worth about $7 billion.

Accel Partners, Iconiq and Sofina also took part, alongside a number of investors commonly associated with later stage investments such as Singapore sovereign wealth fund GIC Private, Morgan Stanley Investment Management and DST Advisors. This latest round is a far cry the $1 million Flipkart received from Accel just five years ago.

"The founders were outstanding, and not only knew technology but were very business savvy," Shekhar Kkirani, a member of the investment team at Accel, previously told AVCJ. "We had many opportunities to interact with the team, and they would frequently come back with improved business metrics. All that got us to believe in their capability in the space."

Flipkart would go on to close six more rounds, raising an aggregate $1.75 billion. Now with 26 million registered users making over six million daily visits and five million shipments per month, Flipkart stands toe to toe with the (unrelated) Bansals' former employer Amazon in a battle for dominance of India's fast growing e-commerce market.

Flipkart's war chest has not only helped the company rapidly scale up its operations, but also make a number of acquisitions as the industry consolidates. These have included: WeRead, a social book discovery tool bought from US-based Lulu Enterprises in 2010; digital content platform Mallers in 2011; and Letsbuy.com, an e-commerce site backed by Accel, Helion Venture Partners and Tiger Global that was picked up for $25 million in 2012.

In May, Flipkart completed its biggest deal yet, purchasing fashion retailer Myntra for around $300 million in May, in a move that would give the company a much-needed advantage in the fast-growing fashion e-commerce segment. It has since moved into e-payments with the acquisition of Ngpay in August.

However, Flipkart is not the only cash rich player in its industry. The day after the $1 billion round, Amazon pledged $2 billion to its India operations. In October, domestic rivals Snapdeal received a $627 million investment from SoftBank Corp, taking its total funding past $1 billion.

It is still early days for the industry. Excluding travel services and tickets, India's e-commerce market is valued at $3.1 billion, according to CLSA. Meanwhile, Technopak estimates the market will be worth $56 billion by 2023.

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• Topics
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• South Asia
• Venture
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• AVCJ Awards