VC-backed Flipkart buys rival Indian e-commerce site

Letsbuy.com has been on the block for a whIle and was looking for a valuation of $80-85 million, The Times of India reported, but found no takers at that price. The company, which was founded in 2009 and specializes in electronics retail, was unable to attract any more investment from its existing backers. Accel, Tiger Global and Helion Ventures reportedly committed $6 million in Series A funding.

Flipkart has experienced no such problems attracting capital. Set up by two former Amazon software developers in 2007, it raised $31 million from its first three rounds of funding. Tiger and Accel recently put another $150 million into the business - valuing the entire company at around $850 million.

The Carlyle Group and General Atlantic were previously reported to be in talks over a $150-200 million joint investment, but the deal was held up by differing valuation expectations.

Flipkart claims to be India's biggest online bookseller, with over 10 million titles distributed from warehouses in five cities. It has over 1,000 employees and sells around 200,000 books a year, offering a 10-15% discount on every purchase. It generated INR500 million ($10 million) in revenues for the fiscal year ended March 2011, up from INR116 million in 2009-2010. It is thought to be on course to reach INR5 billion for the current fiscal year.

Despite the appeal of India's e-commerce sector, it is fiercely competitive and critical mass comes at a cost. Flipkart's acquisition of Letsbuy.com represents a step towards consolidation and there may be more to come. The Times of India noted that Exclusively.in, also backed by Accel, Tiger and Helion, has been making redundancies and is up for sale.

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• Topics
• Technology
• South Asia
• Expansion
• Venture
• TMT
• India
• M&A
• Helion Ventures
• Tiger Global Management
• Accel Partners