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Ahoy! Is India’s First Billion Dollar Internet Firm Here?

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Whoa! Now that is big. Finally, an Indian internet company could have managed to get itself valued at $1 Bn. No guesses here, it is Flipkart.

According to VCCircle’ s sources,

Flipkart Online Services Pvt Ltd, which runs the e-commerce site Flipkart.com, is close to raising $150 million in a PE round of funding from the private equity firm General Atlantic Partners. This funding values the company at a whopping $1 Bn making Flipkart the first internet firm in India to join the Bn $ club

With the kind of valuation it is attracting, Flipkart has set a new benchmark for Indian internet firms and given a hint that Indian internet companies can stand alongside the silicon valley internet companies. To put things into perspective, Twitter is valued at $8 Bn. Now the two companies have nothing in common so it might be foolhardy to compare it like this. But Twitter is a global phenomenon whereas Flipkart is at best an online seller. From where I am standing, a $1 Bn valuation for Flipkart sounds amazing.

Flipkart has been running wild for quite a while and I absolutely love the company for its service. So much so, that the last post I wrote on Flipkart taking the Indian e-commerce space by storm, someone suggested that I might be their PR agent or something. Well,Ii am not and this customer evangelism is what has worked for Flipkart in my opinion.

Flipkart couldn’t have raised another round at any better time. The big daddy of e-commerce- Amazon has announced it grand plans to enter the Indian soil. Whether Amazon will be able to dwarf the likes of Flipkart is not known but it sure can give it a tough fight. A $150 Mn funding could very well provide Flipkart the lever to beef up its armoury should Amazon come looking for blood.

On the same note, here is another interesting angle to the timing of the funding. There are talks that Amazon is expected to strike partnerships with incumbent e-commerce players in India.

Apparently, Flipkart has earlier denied an acquisition proposal by Amazon and Amazon might face challenges to partner with other incumbents. Could the $1 Bn valuation make Amazon take notice again and make on offer Flipkart can’t refuse. If I am not wrong, Flipkart has raised multiple rounds from various investors. If Amazon makes a superb offer, could investors push Flipkart to consider the deal? I wouldn’t’ really want that to happen considering that Indian e-commerce market still has enough space for multiple players.

What are your thoughts on the possibility of Flipkart’s being valued at $1 Bn

  1. […] Unlike a few years back, Indian audience are now getting comfortable in buying goods online, which has seen a sudden growth spurt in the E-Commerce start-ups of late. According to Ebay India head, Deepa Thomas, India is set to become one of the top 10 ecommerce markets in the world by 2015. Given the huge potential of Indian Ecommerce market, early ecommerce startups like Flipkart are commanding estimated valuations of a Billion Dollar! […]

  2. Naushad Shaikh Shakir says

    just waiting for my book to arrive via @Flipkart.
    :)

  3. Jeetu says

    Nice article
    and i also used flipkart and their services are so awesome.
    Guys plz check out my blog http://www.dtplus.in for some cool tech info.

  4. Ankit says

    Balaji, Valid points all of them. I am no expert on valuations so i wont be able to give an intelligent answer here. But here is what i think,

    Investors are a much smarter lot (more often that not). They might fail miserably and might have given into the current e-commerce rage but lets face it they would have based their valuations on things you and i dont know about

    Also, consider the $150 Mn odd funding that Flipkart might be getting, it wont make sense to extrapolate their current growth numbers, would it? For all its worth, Flipkart might expand abroad with this kind of money. The possibilities are endless.

  5. Balaji yadhav says

    What kind of valuations is this.
    Flipkart reported a revenue of Rs 75 crores in FY 2010-11.Supposedly they managed to make 10 times that still the valuations are highly inaccurate.
    Lets be honest here 1 billion $ company should atleast have a revenue of around 1000 Crores annually which lets accept no online portal can get in India.
    India has around 2 Crore active internet users even among them not many use e-commerce. Flipkart should make itself addictive to their consumers to generate those kind of revenues else all the venture capital money is going down the drain.

  6. Bhasker Rao says

    Perfect timing…

  7. Rohit Dsouza says

    Great

  8. Shakun Rai says

    wow Flipkart

  9. Neetish Tewari says

    I wont say its overvalued, Flipkart is actually making Indians shop like never before.

    1. Pant Govinda says

      amazing service and honesty have made it easier fro them.thugs like rediff,indiatimes and infibeam should learn that they can make few bucks by cheating people but never a billion.

    2. Sunila Verma says

      I always knew something like that would happen one day, from the moment I got my first book delivered. They are something! Flipkart rocks! m/

    3. Shridhar Deshpande says

      ooh !! then LetsBuy ;)

  10. Sachin Sharma says

    I remember when I used FlipKart, it had a sense of feel goodness about it. Cheap prices, fast delivery and cash-on-delivery option. I hope rather than FK being acquired by Amazon, we are going to see a competition. Also, this news comes as a confidence booster to Indian entrepreneurs in internet domain!

  11. Balaji Viswanathan says

    IMO, the high valuation is due to M&A opportunities. It is less likely that Amazon would operate in India without a big acquisition – as overseas companies find it very hard to deal with Indian red tape. $1b is still small amount for the likes Amazon or Wal-mart (who is entering India and could enter ecommerce any time).

  12. Vishal Pipraiya says

    Needless to say, e-commerce potential is huge in India with the majority yet to discover online shopping. At current levels it seems overvalued but in the future I wouldn't be surprised it if it crossed that figure. I am a big big fan of flipkart from its incumbent days when they threw the gauntlet to Indiaplaza. Amazing customer service, speedy delivery, they know how to take care of the customer. They even have their own delivery service and no longer resort to the commercial courier companies. Having said all this, if amazon get spurned by flipkart, Indiaplaza would still make a good contender for them to partner with.

  13. Malick Md says

    Great going and Good Luck for Flipkart team…

  14. Gb Bajaj says

    Rumours are there , that AMAZON will take a stake in FLIPKART>.

  15. Niloy Debnath says

    For all e-commerce enthusiasts out there (and start-ups like us), a recent article in Forbes India on the second coming of e-commerce in India. Good Read. http://business.in.com/article/boardroom/ecommerce-in-india-the-second-coming/27042/0

  16. Amit Agarwal says

    Awesome! :)

    1. Ravi Atluri says

      This is such a bubble. Someone is going to burst it!! :p

    2. Ankit Agarwal says

      This did cross my mind. Indian e-commerce funding has escalated by leaps and bounds but IMO e-commerce in india is yet to mature. So, there is a whole market to be tapped and overvaluation may not be that bad

  17. Suvikas Bhandari says

    Reverse calculation. Say P/Sales for $1Bn at 5 : 1 (generous) gives $200mn = Rs 900 Crores of sales. That's the revenue they will have to generate each year. That may be about 1.5 Crore books (at, say Rs 600 per book). I think that's a difficult number to achieve in next 4 years. But hey, its the VC money! :)

    1. Arun Prabhudesai says

      Suvikas… Its just not books, but much more than books… Mobile sales now must be close to 50% of their revenues…and then they are adding verticals nearly every 2 quarters… Books is just one part, but they are expanding into other areas like crazy !!!

    2. Suvikas Bhandari says

      You can change the books to 'units'. Still, 1.5 Crore units to be sold. To mostly the internet savvy population in India – people with the savvy to buy things online. Is a pretty small number. That's, I was thinking about a longer perspective. Thoughts?

    3. Arun Prabhudesai says

      One thing is sure…if that really is the valuation…obviously it is over-valued…but it also is due to the fact that India's ecommerce market is on the rise… and future potential in India is huge

    4. Suvikas Bhandari says

      "Future potential of online e-commerce in India" – now that isn't in doubt. Nor the fact that Flipkart is a great service (I am a customer). But can that translate to a $1 B valuation for One company? Based on some fundamentals? That is the Billion $$$ question :)

    5. Ankit Agarwal says

      @suvikas 1.5 units sold and books are IMO the cheapest segment. They are selling electronics like hot cakes too. Overvalued yes, but consider the value proposition presents to the VCs. An e-commerce brand which is loved by the masses (internet) atleast. With the kind of projections for the indian e-commerce growth, i think its a bet VCs would be willing to take :-) Put a possible acquisition offer by Amazon and the $1 Bn might not seem too high

    6. Mukul Kumar says

      The most expensive laptop on Flipkart is sold at Rs. 1,15,070. The most expensive camera is at Rs. 4,59,999. The most expensive mobile phone is at Rs. 38,990. Clearly they are in for a bigger game. Think about selling a few of those cameras.

  18. Arun Pattnaik says

    The raw power of customer development. The Flipkart guys sure did a freakin amazing job. Good luck!

  19. Nidhi Varshneya says

    Way to go Flipkart…Keep up the good work!

  20. Vinaykumar Patel says

    Its great to see "The Rising" of one more India Product Based IT Company…

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