Days after its months-long attempt to sell its portfolio company Snapdeal to rival e-commerce company Flipkart collapsed in a spectacular fashion, Japan’s SoftBank Group moved at lightning pace to sew up an investment in India’s largest online retailer.
India’s top e-tailer Flipkart has just closed a mammoth round of funding worth $1.4 billion. With this the Bengaluru-based company gets a huge war chest to take on US-based rival Amazon. Here’s all you need to know about the deal.

This marks the largest capital infusion for any privately-held Indian internet venture and surpasses the earlier high set by Flipkart itself when in July 2014 it picked up $1 billion and set the stage for a funding boom in the local startup ecosystem.
Co-founder Binny Bansal said that will continue to operate as an independent entity, maintaining its brand, business and operations. The business will, however, report to Flipkart CEO Kalyan Krishnamurthy. An ex-Tiger global MD, Krishnamurthy took over the reins at Flipkart in January this year. He is also an ex-eBay executive.
The funding round values Flipkart at $11.6 billion, which is lower than its peak valuation of $15 billion but is still being considered a coup for a company that had been hit by steep valuation markdowns by its own investors last year.
The company’s new valuation sets the stage for merger with Indian rival Snapdeal. Earlier this week, Snapdeal CEO Kunal Bahl confirmed merger talks, though he didn’t specify name of the company it is in discussions with. With Snapdeal’s purchase, Flipkart will get a deep-pocketed investor in the form of Japan’s SoftBank.

After what was anticipated to be a landscape-altering transaction fell through, the Tokyo-headquartered technology-to-telecom conglomerate announced a $2.5 billion investment in Flipkart from its $100-billion, tech-focused VisionFund, the largest single bet in the Indian startup ecosystem till date.

But it’s also an investment that many believe comes with riders. Mindful of its bitter experience with Snapdeal, its promoters and fellow board members, SoftBank is now expected to play a far more involved role in Flipkart’s affairs than it has in any of its other portfolio companies in India.

While the world’s largest tech-focused investor is not expected to delve hands-deep operationally, it is expected to participate actively in outlining the domestic online retail giant’s strategic plans going forward. It won’t be the only one.

E-commerce behemoth Alibaba Group and Tencent are strategic investors of Chinese origin that have set up shop in the country, and are working closely with their portfolio companies, Paytm and Hike, respectively.

The three deep-pocketed investors are changing the norms of strategic investors in India, who so far have largely stayed away from participating in the affairs of their portfolio companies here. However, the hands-off approach is not one that is likely to be followed by the newer breed.

“I think that was always the plan with them. It was never to just write big cheques and stay quiet, and certainly not after how some of the past investments have unravelled,” said Praveen Chakravarty, senior fellow at IDFC Institute, a public policy think-tank.

This is in stark contrast to the more passive roles played by the likes of eBay and Naspers when they invested in domestic ecommerce giants about five years ago.

However, compared to SoftBank, the two Chinese internet giants already have a deeper engagement with their respective portfolio companies, a symbiotic relationship that is expected to continue.

Alibaba Group is the majority stakeholder in Paytm E-commerce, having invested $177 million in March. Paytm E-commerce, which runs Paytm Mall, is expected to be the launchpad for the Hangzhou, China-headquartered e-commerce giant in India, with its executives working closely with the Paytm team to expand its offerings and further build its logistics and supply chain infrastructure.

Hike, which counts blockbuster chat app WeChat owner Tencent as one of its major stakeholders, recently launched a digital wallet that allows users to transfer money, recharge their phones and send digital cash vouchers known as ‘Blue Packets’, almost identical to WeChat’s Red Packets.

Tencent, in particular, stands out with its investments stretching across segments and encompassing companies including ed-tech venture Byju’s, Flipkart, digital healthcare platform Practo, and Hike Messenger, the country’s newest unicorn, or a company estimated to be worth at least a billion dollars. “They have looked at e-commerce, entertainment and content. Of the three investors, Tencent, to my mind, has been the most open to doing deals outside its core area,” Sanjeev Krishan, partner, PwC India, said.

“Looks like Alibaba has already done this with Paytm e-commerce, a company in which it owns a majority stake. There is a possibility of Tencent doing the same down the road,” said Rehan Yar Khan, managing partner of Orios Venture Partners.
Khan was the first investor in ride- hailing app Ola, which counts SoftBank and Chinese ride-hailing giant as investors. Tencent, too, is in talks with the company to potentially invest $400 million in the company.

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