Flipkart ready to raise fresh funds up to $1bn by year end

Rebecca Menezes | Sep 10, 2020

Sales by Flipkart had been quite miserable in comparison to Amazon during the July to August period. Surprisingly, it took just 5 days to make up for those poor sales. Flipkart managed 15.5 million sales during its Big Billion Days. The etailer closed more sales than its foreign rival last week. So now, it feels ready to ask for a fresh round of funding from investors.

Flipkart admitting it finally needs funds?

At the start of this financial year, Flipkart’s parent company in Singapore cut off 70% investments to its marketplace business. IOS also reported about the marketplace’s cash burn and how the etailer was in need of cash but refused to say so.

Recently, three persons familiar with Flipkart’s investment plans stated that the marketplace is looking for a new round of funding and will acquire investment capital before the year end. The exact amount to be raised has not been finalized however the ecommerce company is expecting to raise a sum of at least $500 million to $1 billion, claimed the three sources.

Co-founder and Chairperson of Flipkart, Sachin Bansal has been talking with Tiger Global Management about fundraising. Tiger Global is the etailer’s largest investor. The persons with knowledge about the fundraising agenda said this investor shall play a big role in meeting Flipkart’s new investment requirements.

Why is Flipkart looking for fresh capital now?

The last time Flipkart raised fresh funds was back in mid-2015. The marketplace raised about $700 million from investors and earned a valuation of $15 billion. Ever since then the company lost investor trust. Flipkart is looking to change that and its BBD sales are expected to help.

One of the three sources mentioned above said, “The problem till now was that sales had slowed down and the (e-commerce) market also declined. In a young market like India, that is shocking. So Flipkart was in no shape to go for a fund-raise. The plan was to go all in on BBD and if that worked out, to do a fundraise. BBD was phenomenal so you can expect them to hit the market in November-December.”

Flipkart had it rough with the lack of love from investors and constant devaluations. The FDI ban on discounts affected sales. But now, its performance has finally been revived and the etailer feels ready to ask for funds. Flipkart has been in talks with Walmart and the US based company is looking to invest in a small stake in Flipkart. China’s Alibaba Group has also shown interest in investing in the etail business.

Flipkart also owns 70% of the booming online fashion market. Combining its sales with Myntra’s and Jabong’s the etailer is far ahead of its competition. This gives investors another reason to invest in the firm.

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Rebecca Menezes

Rebecca Menezes

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