India's Flipkart receives big investment from SoftBank fund
Aug 12 2017
In a joint statement issued by co-founders Binny Bansal and Sachin Bansal, Flipkart said that the SoftBank investment comprises a mix of primary (investment in the company) and secondary capital (purchase of shares from existing shareholders). There is a lot of market to go for - in 2016, only 1.7% of India's total retail sales were online.
Flipkart has now raised more than $6 billion in cash since starting out in 2007, by far the highest by any Indian start-up and among the highest by any start-up globally.
The latest announcement comes just days after SoftBank failed to merge Snapdeal, where it was the largest investor, with Flipkart.
The firm poured $2.5 billion into the e-commerce giant in what the company claims is the biggest ever private funding deal for a tech company based in India. Armed with a foreign direct investment approval, Amazon is expected to make a splash in the food segment while Flipkart is likely to focus on fashion where it has an edge. Consumers can now expect a lot more fireworks, because Amazon will have to match every offer made by Flipkart.
"India is a land of vast opportunities", Son said in a statement on Thursday.
Meanwhile, Masayoshi Son, chairman and CEO of SoftBank Group Corp said, "We want to support innovative companies that are clear winners in India because they are best positioned to leverage technology and help people lead better lives".
"It is impossible for Softbank to now invest in Amazon so they are looking at several smaller companies like Flipkart and Paytm so that atleast a few of them will give them returns like Alibaba did", added Gupta.
Soon after calling off a potential deal, Chief Executive Bahl said the company, which has been steadily ceding market share to Flipkart and Amazon, will run a stripped-down version of its online marketplace in its second-coming and sell some of its non-core assets.
Another leading investor Ravi Gururaj was of the view that the recent funding has just made things hard for the other global players such as Rakuten, Walmart and Alibaba to make a roadway in the Indian e-commerce market.
SoftBank in May had said the fund will target "meaningful, long-term" investments in companies that seek to enable the next age of innovation.
It has already invested in ride-haling service Ola, a local challenger to Uber, the largest Internet startup in the world.