Flipkart raises $200m, biggest in Indian e-commerce

Online retailer Flipkart has raised $200 million (about Rs 1,200 crore)its existing investors, the single largest round of investment in the Indian e-commerce space. The investment values the company at $1.5 billion, sources familiar with the development said.

The investors are Naspers, the South African internet major that recently bought out bus ticketing startup redBus, private equity firms Accel Partners and Tiger Global, and San Francisco-based family office Iconiq Capital. The total investment in the company, over five rounds of funding, is now over $380 million.

SachinBansal, co-founder and CEO of Flipkart, said the investment was a big validation of the Flipkart model and the Indian e-commerce growth story. "There have been skeptics on Flipkart and Indian e-commerce. Today's development should put to rest these arguments," he said.

The amount Flipkart has received and its valuation is one more indication of the interest that Indian technology startups are receiving globally. Japan's telecom and intenet company SoftBank invested $200 million in Bangalore-based ad network Inmobi in 2011. Last month, Naspers bought redBus for an estimated $120 million. A consortium led by General Atlantic invested $108 million in analytics services firm Mu Sigma in 2011.

Bansal said the annualized run rate of the total value of transactions on Flipkart was over $500 million, and the company was on target to hit $1 billion by 2015. Asked about profitability, he said the company was not profitable only because of the massive investments it was still making. "We can be profitable if we stop investing. But we want to be market leaders in a number of categories, and the market is almost doubling every year, so it's a strategic decision to invest. Binny (BinnyBansal, the other co-founder) and I are thinking very, very long term," he said.

He said the fresh money would be used for investments in technology, improving the supply chain, and developing talent. "One day last month we shipped 1.3 lakh items. That's 1.5 items a second, or, if you look only at daytime, about 4-5 items a second. In a few years, this will become several million shipments a day. The only way to handle that kind of volume is through automation, and that will require a lot of investment," he said.

The company, which started by selling books online, now is into numerous categories including electronics, apparel, watches, cameras, footwear, beauty & personal care, baby care and a host of others. It has 96 lakh registered users, up2.5 lakh two and a half years ago.