Flipkart’s Valuation may Top $2.5 Billion
DST Global, founded by Russian internet tycoon Yuri Milner, is probably best known for buying a 1.96% stake in Facebook for $200 million in 2009. Today the fund, which has stakes in social gaming company Zynga and group buying company Groupon, is among the largest institutional investors in Facebook.
Flipkart had raised $360 million (over .` 2,100 crore) in two tranches last year at a valuation of $1.6 billion (over .` 9,300 crore). This time too the company could opt to raise funds in multiple rounds, said one of the sources. “It could be larger than last year’s funding,” he said. With Myntra in its kitty, the company’s valuation could breach $2.5 billion (over .` 14,600 crore). Flipkart has plans to invest over $100 million (over .` 585 crore) in just the fashion category over the next 1218 months. Flipkart chief executive Sachin Bansal denied that the company was raising fresh investment at the time of announcing the deal to buy Myntra.
He, however, said they would opt for funding if “we find somebody who can add lot more value than just money.” Bansal had admitted that Flipkart’s management is “talking to people all the time.”
Flipkart is rapidly scaling up its operations as it competes with an increasingly aggressive Amazo- n.in and home-grown competitor Snapdeal that raised $100 million (.`585 crore) in funding last week.
Amazon has been aggressively investing in its India operations and expanded to over 22 product categories. It has launched customer service initiatives like next-day and same-day delivery ahead of competition and embarked on a massive marketing campaign.
Flipkart, which crossed $1 billion (over .` 5,850 crore) in sales in March, too has launched customer service initiatives like same-day delivery in over 20 cities and athome trials for certain fashion categories.
As orders race cross the 5-million-a-month mark, Flipkart will have to continue investing in its backend operations in a cutthroat market. The company, along with other players like Amazon and Snapdeal, is also continuing to discount heavily.
The company’s expansion has been funded with risk capital. But despite mopping up over $540 million (over .` 3,100 crore) in private equity funding so far it is not profitable. “Profitability is not the goal right now,” said Flipkart’s Bansal, while speaking about the Myntra acquisition. “We are in a dominant position now, and we should continue to invest to continue to be the leader and grow the market and ahead of the market.”