There is little doubt that Flipkart is a totemic Indian startup, at the least from a funding and valuation perspective. Not only was Flipkart one of the first few privately-held Indian startups to be valued at over a billion dollars but also the first Indian startup to actually raise over a billion dollars in funding. That financing round in July 2014 sparked off the funding frenzy that India witnessed in 2015 and early 2016.

Thankfully, the funding sentiment has cooled down considerably in general since then. And Flipkart itself last raised a round in mid-2015 where it was valued at over $15 billion post-money.

Until yesterday.

Yesterday, Flipkart announced a new funding round of $1.4 billion from a clutch of new investors at a valuation of $10.2 billion pre-money.

What are the takeaways from this round—for Flipkart specifically and the overall system ecosystem in general?

Swallow or Summer?

For a number of years now, there has been a tendency to see Flipkart as some sort of benchmark against which all other Indian startups need to be measured against. Even now, there are opinions that Flipkart’s new round is a signal pointing to a renewed interest from large overseas funds to reinvest in India. But fortunately or unfortunately for the rest of us, Flipkart has been and continues to remain an outlier rather than a representative of the startup ecosystem. The dynamics around Flipkart’s funding and valuation have long outrun any sentiments or constructs that could be regarded as a leading indicator or a template for other Indian startups.

That said, while it may admittedly be unique, Flipkart’s size and gravitas merit attention. So let’s take a deeper look at this latest funding round.

A landmark deal?

Announcing the funding, Flipkart’s founders Sachin and Binny Bansal in a joint statement said, “This is a landmark deal for Flipkart and for India as it endorses our tech prowess, our innovative mindset and the potential we have to disrupt traditional markets.”

While the sheer size of the round, the largest by an Indian startup, might arguably qualify it to be seen as a landmark deal, the rest of the claims seem anodyne and contrived, given the way it was structured.

This new round was led by Tencent, which put in $700 million into the company. eBay put in $500 million while Microsoft ponied up $200 million.

There are three pertinent points about this deal.

Firstly, none of the existing investors put in any additional funds, and the entire round was picked up by new investors.

Secondly, the pre-money valuation of this round was $10.2 billion—a steep fall to the $15 billion post-money valuation that the company commanded at the time of its previous funding round in 2015.

AUTHOR

Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

View Full Profile

Available exclusively to subscribers of The Ken India

This story is a part of The Ken India edition. Subscribe. Questions?

MOST POPULAR

Annual Subscription

12-month access to 200+ stories, archive of 800+ stories from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 2,750

Subscribe
 

Quarterly Subscription

3-month access to 60+ new stories with 3-months worth of archives from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 1,750

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

Rs. 500

Subscribe
MOST POPULAR

Annual Subscription

12-month access to 150+ stories from Southeast Asia.

$ 120

Subscribe
 

Quarterly Subscription

3-month access to 35+ stories from Southeast Asia.

$ 50

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

$ 20

Subscribe

Questions?

What is The Ken?

The Ken is a subscription-only business journalism website and app that provides coverage across two editions - India and Southeast Asia.

What kind of stories do you write?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics.

We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

What do I get if I subscribe?

For subscribers of the India edition, we publish a new story every weekday, a premium daily newsletter, Beyond The First Order and a weekly newsletter - The Nutgraf.

For subscribers of the Southeast Asia edition, we publish a new story three days a week and a weekly newsletter, Strait Up.

The annual subscription will get you complete, exclusive access to our archive of previously published stories for your edition, along with access to our subscriber-only mobile apps, our premium comment sections, our newsletter archives and several other gifts and benefits.

Do I need to pay separately for your premium newsletters?

Nope. Paid, premium subscribers of The Ken get our newsletters delivered for free.

Does a subscription to the India edition grant me access to Southeast Asia stories? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

Do you offer an all-access joint subscription for both editions?

Not yet. If you’d like to access both editions, you’ll have to purchase two subscriptions separately - one for India and the other for Southeast Asia.

Do you offer any discounts?

No. We have a zero discounts policy.

Is there a free trial I can opt for?

We don’t offer any trials, but you can sign up for a free account which will give you access to the weekly free story, our archive of free stories and summaries of the paid stories. You can stay on the free account as long as you’d like.

Do you offer refunds?

We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Please write to us at support@the-ken.com detailing the error or queries.