E-commerce giant Flipkart has raised $1 billion in funding that shows investors’ continued trust in the brand hoping that it would soon spring back into the competition. The investment was backed by major companies that included Microsoft, EBay and Tencent Holdings.
Flipkart is aiming to raise an equivalent amount in next few months, with contribution from eBay which is reportedly in talks to merge its India entity with the company and exit the business. The development comes at a time when the startup ecosystem is confronting a bearish trend in capital-raising, leading to startups like Shopo and Exclusively shutting shops recently.
Earlier this month, the company saw a major markdown when Morgan Stanley mutual fund pegged the valuation of the e-commerce brand at $5.37 billion, down from its own valuation of $5.6 billion in September 2016. The fundraising comes as a welcome boost amidst the tumultuous developments in the e-commerce sector in the country.
As per a study by research and consulting firm, RedSeer Consulting, the Indian e-commerce industry, which grew in 2015 by 180%, grew only by 12% in 2016. Snapdeal posted a loss of INR 29.6 billion (2015-16); Flipkart revealed losses of INR 52.23 billion and Amazon a loss of INR 35.71 billion. Combined the loss reaches a mammoth figure of INR 117.54 billion.
The latest round of funding was closed on Friday at a valuation of about $10 billion, which is still a decline from Flipkart’s $15.5 billion in 2015. Clearly, the 10-year-old startup is all set tighten the screws on Amazon and its other rivals for a chunk of the e-commerce market.