India’s biggest online retailer Flipkart is in talks to close another $550 million fresh funds at a valuation of nearly $16 billion. This deal is expected to be closed by the end of this month. Existing investors are also participating in this new round of funding. As per the reports, Tiger Global is leading this round with $100 million. Company didn’t confirm any talks regarding this fresh round of investment.
This is the first time in 2015 when Flipkart is raising funds. Last year, it raised around 1.9 billion in three rounds of funding from investors including Baillie Gifford, Greenoaks Capital, Steadview Capital, T. Rowe Price Associates and Qatar Investment Authority, DST Global, GIC, ICONIQ Capital and Tiger Global.
This new fresh round of funds will be used to strengthen its logistic network and improve the technology backbone. It is also planning to go app-only. So, making its mobile apps better and more engaging must be its priority.
Recently Flipkart also hired top tech talent from Google and few other persons from Silicon Valley. Company also locked the deal of India’s largest office space in Bangalore. It also acquired a mobile app startup for boosting its mobile app engagement.
Flipkart is competing with Amazon and Snapdeal in India. Last year, Snapdeal raised around $850 million while Amazon’s founder Jeff Bezos promised to push $2 billion in the Indian arm Amazon.in. But, it seems that Flipkart is much ahead of its competitors. Although it faces few legal issues and criticism for its sales, users still prefer Flipkart over other retailers. This is the reason, it is attracting investors. Few days back, Flipkart also confirmed that it is not in hurry to go public. But we can expect that Flipkart will file for IPO next year.
Flipkart is one of the fastest growing startup of the world. And every year, it raise big amounts to boost its valuation. We cannot confirm what company will go for IPO route. But it seems that the time will as early as next year.
The only problem with Indian e-commerce industry is the cash burn rate. These companies are raising huge funds and burning it. But there is no sign of becoming profitable in next few years. Investors are pushing more and more money to keep these companies running without interruption in options because they have a hope that someday, these companie will become profitable.
Source: Economics Times
