“This could be the penultimate round of funding before Flipkart explores raising more money in the form of debt later this year,“ said one of the sources.
Flipkart did not reply to questions sent by email.
The Bengaluru-based company raised $1.9 billion last year in three rounds, giving itself firepower as it battles SoftBank-backed Snapdeal and US-based Amazon for dominance in an online retail market estimated by UBS to be worth $50 billion by 2020. So far, online retail in India has been characterised by deep discounting, which has served to lure customers but also resulted in high cash burn rates and heavy losses.
CO HAS HIRED TOP TECH TALENT
Much of the money will be used to strengthen Flipkart’s technology backbone and its logistics network, the sources said. Indeed, over the past few months Flipkart has hired top tech talent from Google and undergone a reorganisa tion as part of which co-founder Binny Bansal has been tasked with focusing on the supply chain and logistics. Sachin Bansal, the CEO, is overseeing new initiatives while Mukesh Bansal, who sold fashion portal Myntra to Flipkart a year ago, is in charge of online commerce.
“With new investments and top hiring, the cash burn rates have increased too,“ said the second source.
At present, Flipkart’s run rate for value of goods sold is estimated at $4 billion and the company has set itself a target of doubling this to $8 billion by the end of 2015.
There has been a fund-raising lull for online retailers this year after record sums of money were committed to the top three companies in 2014. Snapdeal snagged over $850 million last year, including $627 million from Japan’s SoftBank, and Amazon founder Jeff Bezos has promised to invest $2 billion in the Indian arm.
Flipkart, founded in 2007 as a retailer of books, employs over 20,000 and has raised around $2.5 billion from nearly a dozen investors. In December last year, it raised $700 million at a valuation of over $11 billion.
In a recent report, Goldman Sachs estimated that Indian online retailers such as Flipkart and Snapdeal must collectively raise . 1.27 lakh crore) over $20 billion ( ` next five years to be able to sustain growth.