Excl: Flipkart to raise another round of private funding before going public, IPO 2-5 years away

Excl: Flipkart to raise another round of private funding before going public, IPO 2-5 years away

India's largest consumer e-commerce venture Flipkart will raise a fresh round of funding before going public and its much anticipated initial public offer (IPO) is 2-5 years away, according to Sachin Bansal, the co-founder and CEO of the company.

Speaking at the Techcircle E-commerce Summit 2013 in Mumbai on Wednesday, Bansal said it will be a large round considering the company has already raised four rounds of funding. He did not specify the amount.

Bansal also mentioned that the company is still evaluating options for listing in India or abroad.

The company had earlier (in August 2012) raised an undisclosed amount in its Series D round of funding from existing investors Tiger Global and Accel Partners, as well as from two new investors – MIH (part of the Naspers Group) and ICONIQ Capital. Although the firm did not disclose the deal amount it was reportedly around $150 million.

Prior to that, it had raised $31 million from Tiger Global Management and Accel Partners, besides a few angel investors across multiple rounds of early-stage funding.

Bansal said that companies generally raise money to sustain operations for 18 - 24 months and that was the thought process when Flipkart raised funds as well. So, considering it raised its last round last August, we assume it should raise the next round within the next twelve months.

The Bangalore-based company was founded by Sachin and Binny Bansal (not related) in 2007 as an online book retailer and has since diversified into a generic e-commerce site with categories such as CDs/DVDs of music, movies, games and software, mobile phones and electronics.

The company has been rapidly expanding and added a number of categories last year that included pens and stationery, home appliances and perfumes, lifestyle-related products, toy section, baby care products, private label for digital accessories under the brand Digiflip, sports and fitness products and footwear.

It has also just entered the women's apparel category dominated by Jabong and Myntra.

It currently employs 2,000 people for logistics (for the warehouse and deliveries) and the same number in other functions such as customer support, technology development, etc.

Bansal also shared insights about the company and its journey from a small startup to the largest consumer e-commerce firm in India. He listed three biggest milestones for the company also.

The initial milestone was when it opened its first warehouse in Delhi, around that time it also tied up with two international book suppliers (at the time the company was only selling books). The second milestone for the company was when it received funding from Accel partners.

"We had been chasing investors since 2008-09. Some of them even told us we should quit, but Accel agreed to put in money in the company and that gave us confidence," said Bansal.

"We were supposed to receive the first tranche of Rs 50 lakh from Accel in Jan 2009. They told us that we would receive the next tranche when we reach the milestone of 1,500 orders a day. But by the time the paperwork for the first tranche got completed (June 2009), we had already crossed that milestone, so Accel directly invested $1 million," he added.

The third milestone for the company was when it launched the electronics category. "We didn't actually know much about the category, but we still launched it (along with cash on delivery). It turned out to be a mess and was a very hard learning. In fact, the entire 2010 went in that," he said.

What's in store?

Bansal said that books was a great category to start with and while electronics is the biggest category for the company as of now, books still constitute 30 per cent of the sales for Flipkart. As of now, the company spends about $3-4 per head for customer acquisition, but the target is to bring it down to $1-1.5 per customer.

Sharing information about how Flipkart is doing in terms of improving profitability Bansal said, "Two years ago we used to be EBITDA negative by 30 per cent but now it is in single digits."

He said the company is still in growth mode and is continuously evaluating potential acquisitions. Flipkart had acquired Letsbuy.com, a specialised e-commerce site run by the eTree Marketing Pvt Ltd in February last year and had later shut down Letsbuy as a separate site.

Bansal reiterated the previous target of hitting annual gross merchandise value of $1 billion in another 2-3 years. "We were targeting a billion dollar in revenues by 2015, but I am pretty sure we will exceed that number now," he said.

(Edited by Prem Udayabhanu)

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