Flipkart Raises $1.4 Billion from Microsoft, eBay, and Tencent in Biggest Fundraising Round; Acquires eBay India

Flipkart on Monday announced that it has raised $1.4 billion (approximately Rs. 9,030 crores) - the largest fund-raising yet for an Indian startup - from a consortium of investors, namely Tencent, eBay, and Microsoft. The talks between these companies were reported in February, at which point the speculation was that Flipkart would be valued at around $10-12 billion (around Rs. 64.5 crores to Rs. 77.5 crores) - the actual funding puts Flipkart at $11.6 billion.

This investment adds to an existing group of investors that includes Tiger Global Management, Naspers Group, Accel Partners and DST Global. Apart from this, there are further rumours that SoftBank would invest in Flipkart as part of a Flipkart-Snapdeal merger, though of course all this is speculation at this point.

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"We are delighted that Tencent, eBay and Microsoft - all innovation powerhouses - have chosen to partner with us on their India journey," wrote Flipkart co-founders Sachin Bansal and Binny Bansal in a mailed statement. "We have chosen these partners based on their long histories of pioneering industries, and the unique expertise and insights each of them bring to Flipkart. This deal reaffirms our resolve to hasten the transformation of commerce in India through technology."

Chinese giant Tencent, which has invested in social networking, gaming, e-commerce, and other areas, is joining as a strategic investor, the release noted, and will be lending expertise to Flipkart in areas such as social and payments. In China, the company rivals Alibaba, which is an investor in Snapdeal and Paytm.

The investment by eBay is accompanied by a strategic commercial agreement with Flipkart. In exchange for an equity stake in Flipkart, eBay is making a cash investment in and selling its eBay.in business to Flipkart. eBay.in will continue to operate as an independent entity as a part of Flipkart.

"eBay is committed to winning in India in partnership with Flipkart," said Devin Wenig, President and CEO of eBay. "Our exclusive global trade partnership will allow eBay and Flipkart to reach even more consumers around the world.”

Flipkart’s latest valuation is less than its previous $15 billion (roughly Rs. 1 lakh crores) valuation, which, had further dropped to below $10 billion by late-2016, according to unofficial reports.

In February, Microsoft and Flipkart announced a cloud partnership. Flipkart will start using Microsoft Azure as its public cloud, and the platform will provide analytics to the online marketplace's existing servers. Flipkart is also looking to use Microsoft's AI tools to help provide customers better recommendations, amongst other things. The Azure platform's global scale will also allow for continued growth and expansion, the two companies said, part of Flipkart's 10-year-plan to scale up to 500 million customers.

Global e-commerce giant Amazon had announced last year that it will invest an additional $3 billion in India, bringing the total investment in the country up to $5 billion, so it remains to be seen if the $1.2 billion will be enough for Flipkart to help fight off the competition. According to Crunchbase, in 13 rounds including this one, Flipkart has so far raised a total of $4.65 billion (approximately Rs. 30,000 crores).