Supermarket conglomerate Wal-Mart has entered talks to acquire US-based e-commerce startup Jet for a price that could reach $3bn, the Wall Street Journal reported yesterday, citing people familiar with the matter.
The prospective acquisition would mean exits for investors including e-commerce firm Alibaba and GV, the corporate venturing subsidiary of internet technology conglomerate Alphabet formerly known as Google Ventures.
Jet employs an e-commerce model that allows buyers to save money by buying goods in bulk, not too dissimilarly to how big box retailers like Wal-Mart operate.
Founded in 2013, the company launched commercially in July 2015 and initially required an annual membership fee of $50, though that condition was scrapped in October.
Jet closed an initial $80m in equity and debt financing from New Enterprise Associates (NEA), Accel Partners, Bain Capital Ventures, MentorTech Ventures, Western Technology Investments and Silicon Valley Bank (SVB) in 2014
Google Ventures, Bain, Accel, MentorTech, NEA, Goldman Sachs, SVB, Coatue Management, General Catalyst Partners, Norwest Venture Partners, Thrive Capital and Temasek provided $140m for the company in February 2015 at a post-money valuation of $600m.
Financial services group Fidelity then led a $350m round in November also backed by Google Ventures, Alibaba and Bain Capital Ventures that valued Jet at $1bn pre-money.
The round was to hypothetically include another $150m from Fidelity but the firm has not revealed whether that money was eventually supplied.
Although Jet has however been making substantial losses since it was founded, a person familiar with the matter told WSJ Wal-Mart could potentially pay up to $3bn, which would more than double Alphabet and Alibaba’s money, in order to compete against Amazon.
Amazon, the market leader in the US e-commerce sector, became a more valuable company than Wal-Mart in 2015 and its market capitalisation is now 50% larger. The purchase would also give it Jet’s advanced pricing software, which calculates discounts according to basket size and proximity to warehouses.