India-based e-commerce company Flipkart has closed a $1bn funding round featuring software provider Microsoft, e-commerce firm eBay and internet group Tencent, Bloomberg reported yesterday, citing people familiar with the matter.
The funding was raised at a valuation of about $10bn according to the sources, a steep drop from the $15.5bn valuation at which Flipkart closed its last round in 2015. A source confirmed a post-money valuation of $11bn to the Business Standard.
Founded in 2007, Flipkart operates a diversified e-commerce marketplace that sells a wide variety of consumer goods.
The company is fighting a rearguard action against domestic competitors like Snapdeal and Paytm E-commerce as well as foreign players such as Amazon, which Flipkart outperformed in the 2016 holiday period.
The capital will support promotions and discount offers that will help the company compete against its rivals.
Microsoft, Tencent and eBay were named as prospective investors in a report last month that also identified payment technology provider Paypal and CapitalG, the growth equity arm of internet and technology conglomerate Alphabet, as potential participants.
The round boosted Flipkart’s overall funding to about $4.1bn, its last round, which was backed by Tiger Global Management and Steadview Capital, having been sized at $700m.
Other past backers include media group Bennett, Coleman & Co, which provided $38.8m of capital and advertising in December 2016, media and e-commerce firm Naspers and IDG Ventures India, the local venture capital affiliate of media company International Data Group.
Flipkart intends to raise up to $1bn more over the next few months, according to Bloomberg. A source told Business Standard the company expects to secure about $500m if that sum from eBay as part of a deal that will involve it merging its Indian business with Flipkart and exiting the country entirely.
Microsoft’s contribution to the round was made in the wake of a deal in which Flipkart agreed to exclusively use Microsoft Azure as its cloud computing partner.