Flipkart’s hedge fund boss is looking for $1.5b
No investor has more to lose from the potential implosion of Indian e-commerce company Flipkart than its biggest backer, New York's Tiger Global Management.
Last summer, with Flipkart Online Services Pvt losing ground to Amazon.com Inc, Tiger sent in former EBay executive Kalyan Krishnamurthy (in pic) to help turn around India's most valuable internet startup. The two co-founders stood aside as Krishnamurthy took control of its biggest sale season, fired senior managers and set tough traffic and sales targets. After Flipkart narrowly outsold Amazon during the critical year-end shopping rush, he was named chief executive officer, the company's third in the span of a year.
In a rare interview at Flipkart's headquarters in suburban Bangalore, Krishnamurthy, a boyish 45, sipped water and projected steely resolve. "We feel great about where we are," he said. In fact, 10-year-old Flipkart is in a fight for its young life. Amazon, determined to get it right in India after being vanquished in China, has pledged to spend $5 billion on its India operations over the next few years; a new rival, Paytm E-commerce Pvt, backed by China's mighty Alibaba Group, has joined the race. Flipkart is spending heavily on promotions, offering discounts and losing millions of dollars a month. If it's to have any hope of countering its deep-pocketed rivals from the US and China, Flipkart will have to persuade investors to inject fresh capital.
The good news: The company will probably get the money. Flipkart is in discussions with a range of investors including Microsoft Corp, EBay Inc and Tencent Holdingsto raise anywhere from $1.2 billion to $1.5 billion, enough to carry it through another four years, according to a person familiar with the situation. The bad news: getting the money will mean accepting a lower valuation, perhaps around $10 billion, said the person who requested anonymity to discuss a private matter. That would be down from $15.5 billion in 2015. “We are in touch with several investors,” Krishnamurthy said, declining to comment on specific figures. “Is funding top-of-mind when I wake up every morning? No.”Tencent, EBay and Microsoft declined to comment.
A few years ago, Indian startups could do little wrong in the eyes of investors, who saw the nation of 1.3 billion people as a democratic, relatively free-market version of China. But last year, the country began its own version of the dot-com bust. Hundreds of Indian internet startups are losing money, cutting jobs and reducing valuations in exchange for fresh financing. A Bangalore-based firm even put together the Deadpool list, a catalog of dead or dying startups similar to the F**ked Company website created in the aftermath of the US internet bubble.