Flipkart Raises $2.5 Bn From Softbank; India’s Largest Ever Funding Deal

Flipkart finally received that lifeline which it was desperately looking for since last few months. And in the process, has set a new standard for VC backed funding in India.

Softbank has agreed to invest around $2-2.5 billion in Flipkart, which makes it Indian ecommerce’s largest ever investment in any company.

With this investment, Flipkart has now raised approximately $8 billion via 14 rounds.

Their last round of investment happened in April this year, when Flipkart raised $1.4 billion from Microsoft, Tencent and eBay.

After the much-hyped merger between Flipkart and Snapdeal failed, speculations were rife that Softbank, a majority stake holder in Snapdeal and a major investor in Paytm may back-off from further investments in this space. This was because Softbank was really keen to merge Snapdeal with Flipkart, and to consolidate their investments for a larger battle with Amazon.

However, their latest investment in Flipkart, which is the highest Indian ecommerce sector has ever seen, has completely reversed all such speculations, and in a way, changed so many things.

Flipkart co-founder Binny Bansal tweeted: “Excited to welcome Softbank Vision Fund as a long-term partner in @Flipkart!A true recognition of India’s potential.”

Flipkart co-founder Sachin Bansal issued a statement: “This is a monumental deal for Flipkart and India. Very few economies globally attract such overwhelming interest from top-tier investors. It is recognition of India’s unparalleled potential to become a leader in technology and e-commerce on a massive scale. SoftBank’s proven track record of partnering with transformative technology leaders has earned it the reputation of being a visionary investor,”

Note here, that the funding has been made via Softbank’s Vision Fund, which is worth $100 billion. Softbank has now bought Tiger Global’s stake, thereby becoming majority stakeholder in Flipkart.

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. As the pioneers in Indian e-commerce, Flipkart is doing that every day,”

Here are top 3 changes which the industry may observe, in the coming days:

1. Softbank has now made a massive entry into India’s second largest ecommerce portal, and this is a major development in itself. In coming days, we may now witness the ecommerce battle between two parties: Amazon on one side and a consortium of Flipkart-Paytm-Alibaba-eBay-Softbank on the other.
2. Indian ecommerce sector, as a whole, has received a new lease of life. Flipkart would be able to attract new talent, ecommerce sector will generate revenues for advertisement agencies, marketing firms and a lot more startups will now attempt to milk this massive ecommerce battle. Overall, besides these $2.5 billion, a lot of more funds would be introduced into the sector. A sort of repeat of 2013-15 period of ecommerce boom.
3. The timing of the deal is another major pointer. Softbank has infused $2.5 billion at a time when the prime festive seasons is about to start with Dussera within a month, Diwali after two weeks, and then Christmas and New Year. The infusion of fresh capital couldn’t have come at a better time. Consumers can now expect a lot more fireworks, because Amazon will have to match every offer made by Flipkart. More discount, and more offers.

We will keep you updated as we receive more details on the mega-deal.