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Flipkart is like Lionel Messi while Myntra is a defensive player, says Subrata Mitra of common investor Accel Partners

27 January, 2014

The difference between India’s largest horizontal e-commerce player Flipkart and its cross-town rival and one of the top vertical players in lifestyle e-tailing Myntra, is the same as that of football striker Lionel Messi and any defensive line backer, according to Subrata Mitra of venture capital firm Accel Partners.

Accel Partners is a common investor in both the ventures and Mitra represents the VC firm on the board of both the Bangalore-based companies.

“The DNA of the two companies is very different as one is defensive and other is offensive. One is like Messi trying to score a goal while the other is like a line backer,” said Mitra last week, answering a question about difference between the two firms at VCCircle Private Equity Exits Conference 2014 in Mumbai.

Messi, an Argentinian who is much better known as the lead striker of Spanish football club Barcelona, is famous for his attacking gameplay and considered by many as the best football player of the current generation.

Mitra also spoke about Myntra’s new fundraising without divulging any specifics. “(For) Myntra, we have been in market for four months and it (fundraising) was tough work,” adding that the investment discussions with Myntra revolve around the company getting profitable.

Myntra.com, which is arguably the largest apparel and accessories retailer in the country along with Jabong, is reportedly close to raising a new round at over $200 million valuation. Meanwhile, Flipkart Pvt Ltd, which runs India’s top consumer e-commerce firm Flipkart.com, raised $360 million last year at a valuation of $1.6 million.

Accel Partners has been an early backer of both the ventures. Both Myntra and Flipkart were started in 2007. Myntra, which initially focused on customised merchandising, raised its Series A funding of $4 million from Accel Partners (then Erasmic), IDG Ventures India and Kalaari Capital (then Indo-US Venture Partners). Flipkart, which started out with selling books, raised its Series A round of under $1 million from Accel Partners in 2009.

According to Mitra, investors are also seeing the difference between the two companies, which could be one of the factors playing into their valuations.

“Investors believe that an aggressive company can take 50-70 per cent of the market and become very profitable,” he said referring to Flipkart.com. The horizontal e-commerce firm is already estimated to enjoy around 45 per cent market share in the business (not including OTAs).

Flipkart expects to beat its target of $1 billion in revenues in 2015 while Myntra is expecting revenues to reach Rs 800 crore in FY14.

So what is the endgame for Flipkart? With a valuation of $1.6 billion already and new investors also seeking an upside, who could invest at a higher valuation in the company?

Mitra says there is no lack of capital for the right asset and Flipkart is also looking at big acquisitions as it looks to build scale with its massive war chest.

“I don’t think that there is dearth of capital. We have discussed $100 million dollar acquisitions at Flipkart,” he said.

Mitra also referred to what is considered to be the most likely outcome for Flipkart, an initial public offer (IPO), which could see the company list in an overseas market. This possible listing could also provide a liquidity or exit opportunity for other firms which invested in the venture in the past. It can also be an opportunity for raising more capital to buy other firms.

“In the process (of an IPO) we can pull a bunch of companies that can come up with us. Flipkart bought Letsbuy but we decided to shut it down in the end. It helped us in the end as we were able to remove one competitor from the market,” he said.

Mitra, who has figured in the Forbes Midas List of Top Global Venture Capitalists in the past, believes that big things could be in store for the Indian internet market.

“In India, the internet opportunity is just opening up. Even if we get to a fifth what China has done in the next five-six years, we will see multiple companies with over $10 billion valuation,” he said.

China’s e-commerce market is reportedly worth $200-300 billion, while India’s was estimated at $16 billion in 2013.

(Edited by Joby Puthuparampil Johnson)


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Flipkart is like Lionel Messi while Myntra is a defensive player, says Subrata Mitra of common investor Accel Partners

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