Friday, Nov 21, 2014

$1 billion in bag, Flipkart now eyes 100 million users

The capital infusion is reckoned to be the biggest fund-raising ever for an Indian e-commerce company. The capital infusion is reckoned to be the biggest fund-raising ever for an Indian e-commerce company.
Bengalore | Posted: July 30, 2014 8:59 am

India’s e-retailing market, tipped to hit $20 billion by 2020 or even sooner, was given a strong endorsement on Tuesday with Flipkart.com attracting a chunky $1 billion in funding from existing investors Tiger Global Management and Naspers.

The capital infusion is reckoned to be the biggest fund-raising ever for an Indian e-commerce company.

In what must be the biggest jump in valuations in the shortest span of time, Flipkart, according to industry watchers, is now valued at anywhere between $5 billion and $6 billion, twice the estimated $2.5-3 billion in May, when it picked up $210 million.

Click here for graph

For perspective, till the joint venture came apart, Bharti-Walmart had invested Rs 2,500 crore to set up 200 front-end stores and 20 cash-and-carry outlets; Walmart’s turnover from its cash-and-carry piece is close to Rs 3,000 crore.

Flipkart co-founders Sachin Bansal and Binny Bansal want Flipkart to be the country’s first internet company to be valued at $100 billion — in comparison, the Tata Group’s market capitalisation as of July 28 is $138 billion.

Thanks to a generous set of sponsors, the Bangalore-based company has so far mopped up close to $1.7 billion as it battles Amazon and Snapdeal for the top slot in a market estimated at around $3 billion.

The funds backing the e-retailers aren’t just generous, they’re patient too — profitability is not top of mind for Flipkart’s founders although the e-retailer has been in business for seven years now and is understood to be in the red.

“We have 22 million registered users today and the way we see it, when we’re at 100 million customers, that day we will be profitable,” Sachin Bansal told FE. Bansal said he didn’t know whether it would take three years or eight to get there, adding that the firm would think of profitability once it had delivered a product in one of three Indian homes.

The focus, according to Bansal, is the growth of the customer base, the experience they get and the number of sellers. Flipkart says its gross merchandise value (GMV) crossed $1 billion in March 2014.

Flipkart has been on a fund-raising spree for some time now, having raised $210 million in May, a week after it acquired online fashion retailer Myntra, from a group of investors led by DST Global and comprising existing stakeholders like Tiger Global, Naspers and ICONIQ Capital. Singapore’s sovereign wealth fund, GIC, along with existing investors Accel Partners, DST Global, ICONIQ Capital, Morgan Stanley Investment Management and Sofina also participated in this latest round of funding.

Flipkart has 22 million registered users and handles 5 million shipments a month.

According to the company, by 2020 India will have more than half a billion mobile internet users and its focus on mobile and technology puts the company in a continued…

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