Flipkart raises $160M more from Morgan Stanley, Vulcan Capital, Tiger Global, others
India’s largest consumer e-commerce player Flipkart.com has raised an additional $160 million (Rs 990 crore) in the fifth round of funding started in July this year, from new investors including Belgium-based Sofina, US-based Morgan Stanley Investment Management, Dragoneer Investment Group and Vulcan Capital (founded by Microsoft co-founder Paul Allen), along with participation from existing investor Tiger Global.
Flipkart Pvt Ltd, a Singapore-based holding firm, had previously raised $200 million from existing investors Naspers Group, Accel Partners, ICONIQ Capital, and Tiger Global in the first tranche of the group’s fifth round of external funding. This was just three months ago and with the second phase, the total capital raised from the fifth round reaches $360 million, which is the single-largest amount to be raised by any Indian internet business ever.
Flipkart Pvt Ltd owns Flipkart India Pvt Ltd, which in turn owns the site Flipkart.com. Flipkart.com is operated by a separate firm WS Retail Services under a brand licence. WS Retail is partly owned by an angel investor and some employees of the group, to comply with foreign investment norms as FDI is not allowed in e-commerce. Flipkart India handles the backend of the e-com venture.
This fresh funding takes the total funding for Flipkart so far to over $540 million and comes 15 months after it had raised what was reportedly a $150 million Series D round led by the Johannesburg-based Naspers in a deal which valued it at $1 billion.
The company said that the funds raised from this round will be used to further build its technology and supply chain capabilities, develop the talent pool and enhance the end-user experience.
"The e-commerce industry in India is growing at a pace faster than what was expected, and it has reached an inflection point today. In such a scenario, as market leader, we need to scale up fast and aggressively. This also requires a lot of investment in infrastructure and technology that are essential for the sector’s growth," Flipkart co-founder and CEO Sachin Bansal told VCCIrcle/Techcircle.in.
According to Bansal, the current ecosystem in India does not allow a really large e-commerce player to operate. "Thus, as the largest player here, we need to build a lot of the systems ourselves. That is where our investments lie—in building technology, supply chain and talent pool that is needed to run an e-commerce operation as big as ours."
In July this year, the company launched own payment gateway PayZippy. The gateway is housed under a separate firm Flipkart Payment Gateway Services (FPGS) Pvt Ltd; the group has started with the B2B offering of the online payments solution.
This came after a category reorganisation exercise where it shut down a few verticals, including its digital music store Flyte and pruned its electronics category by reducing big-ticket items such as large home appliances and televisions.
Flipkart had previously raised three rounds of institutional funding from Tiger Global and Accel Partners besides angel funding.
In April this year, the firm launched its marketplace and integrated it with its existing e-commerce platform to enable third-party sellers to list and sell their products on its website and sell directly to consumers. The firm claims to have over 500 suppliers on the marketplace as of now.
Two months later, the Indian e-commerce space saw the entry of Amazon, which launched its services as a pure marketplace, taking on the veteran in the marketplace business, eBay at its own game. Thereafter, Snapdeal, which pivoted from a deals site to a managed marketplace, raised a $50 million fresh round which included investment from eBay itself which pushed Snapdeal’s total funding to over $100 million.
Amazon has been aggressively expanding its marketplace adding product verticals.
(Edited by Joby Puthuparampil Johnson)
Startups in India for long have been the favourites of private equity and venture capital investors doling out
Flipkart India Pvt. Ltd. owns and operates an online portal flipkart.com. It is an e-commerce company. It offers books, apparel, footwear, lifestyle accessories, baby care products, toys, posters, sports and fitness accessories, consumer electronics and gadgets, etc. The company was founded in 2007 and is based in Bengaluru, Karnataka. Flipkart India Pvt. Ltd. operates as a subsidiary of Flipkart Pvt. Ltd.
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Tiger Global Management LLC is a hedge fund managed by industry Mogul Charles Coleman. The firm manages hedge and private equity funds, which invests in the public and private equity markets across the globe primarily in United States of America, China, India, South East Asia, Latin America, and Eastern Europe. It seeks to invest in real estate, telecommunications, energy, media, and retail sectors. The firm also invests in fixed income markets of United States of America. The company was founded in 2001 and is based in New York, United States of America.
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Morgan Stanley is an investment banking firm. It services include wealth management that includes cash management and lending solutions, institutional consulting, estate planning and wealth transfer; investment banking services focusing on mergers and acquisitions; and global capital market. The firm also offers investment strategies, access to banking services, philanthropy, investment solutions, private wealth management, sales and trading, investment banking, investment management, research prime, brokerage and institutional consulting services. The company was founded in 1935 and is based in New York, United States of America.
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