Who would have thought that the two 25 year-old young graduates from IIT-Delhi who were distributing bookmarks outside Gangaram bookstore (Bangalore) in 2007, will own a $5 billion company one day?
Exactly, 13 years and 3 months after Amazon was started, two of its ex-employees from India decided to take up the idea of selling books online in India. In less than seven years, Flipkart has not only rewritten the history of ecommerce industry, but is in a commanding position to challenge the ecommerce behemoth, Amazon.
India’s largest e-commerce marketplace, Flipkart has made the official announcement that it has raised US $1 billion in one of the largest funding rounds for any e-commerce company globally. This is also the single largest round by an internet company from India.
Tiger Global Management and Naspers have co-led the investment and the funds will be used to make long-term strategic investments in India, especially in mobile technology. 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 financing round.
Both the founders didn't answer clearly if this will be the last round of funding before an IPO, but confirmed that in short term, they are not looking to raise money. They said, "We were not looking for funding but when it was offered we accepted it after weighing the pros and cons. In this case, the pros outnumbered cons and we went ahead with the funding."
Also read: Flipkart's funding journey so far
Sachin Bansal, founder of Flipkart, draws parallels of this funding with China’s Alibaba raising $1 billion from Yahoo in 2005. Ecommerce was at an inflexion point in China then, exactly where India is today. He mentioned,
We might take 2 years or even 10 years to go for an IPO. It is definitely not our priority as of now. We believe that we're not yet ready to go public because our model is still evolving. More than 50% of our sales comes from mobile internet users. We have launched Moto-G, Moto-E and Xiaomi Mi3 phones exclusively on our platform in India. None of these were in picture two years ago and as a business we are still figuring out a different perspectives of ecommerce industry and consumer behavior.
We are here for a long run and definitely aiming at becoming a $100 billion company in next 5 years.
According to Binny Bansal, Flipkart will invest heavily in technology and mobile with these funds. The company is in a process of creating new commerce system and putting a dent in the ecommerce industry across the world.
The newest investor who has joined this round of funding, GIC is a leading global investment firm with well over US$100 billion in assets under management. The firm is responsible for managing Singapore’s foreign reserves and is uniquely positioned for long-term and flexible investments across a wide range of asset classes, including public equities, fixed income, real estate, and private equity.
Sachin Bansal and Binny Bansal spoke about the funding, and the company’s plans going forward:
We believe the internet will improve the quality of life for millions of Indians, and e-commerce is going to play a huge role in this change. Flipkart has close to 22 million registered users today and handle 5 million shipments a month. These numbers were unheard of a few years back and there is a huge opportunity that we still see before us.
Flipkart will also invest in training sellers for the marketplace, providing all small and medium entrepreneurs, manufacturers and artisans a national platform to connect with millions of customers.
India has 243 million internet users – and this number continues to grow very fast. By 2020 India will have more than half a billion mobile internet users. Flipkart wants to enable every Indian to either shop or sell online and they see mobile internet playing a crucial role in achieving this goal.
Sachin said, “This new funding will enable us to step up our investments for innovations in products and technologies, setting us up to become the mobile e-commerce company of the future. This funding will help us further accelerate momentum and build our presence to become a technology powerhouse.”
Flipkart has already put Indian e-commerce on the global map becoming trendsetters. The company claims to be the first to launch dedicated logistics and the first to offer COD - cash on delivery on scale, which dramatically changed the way Indian’s bought online at scale.
2014 has been frenetic at Flipkart with several important announcements. Some of them include:
- Ramp up its focus on fashion through acquiring Myntra.
- Raising $210 million led by DST-Global.
- Exclusive launch of Moto-G and Moto-E on Flipkart followed by Xiaomi MI3’s launch.
- Appointing Rajnish Baweja, ex-Bharati Airtel employee as Finance Controller.
Today, Flipkart.com offers more than 15 million products cross 70+ categories including books, media, consumer electronics and lifestyle. Flipkart is currently 14000 people strong, and has 22 million registered users clocking over 4 million daily visits. It has recently become the first e-commerce company out of India to hit US $1 billion in GMV as well.
Do you think that this is last round of venture funding before Flipkart goes for an IPO?