Indian e-commerce company Flipkart has reportedly completed raising funds to the value of $1 billion and hopes to raise another $1 billion in the months ahead, giving it the boost to put up a fight with rival players in the sector.
The funding was secured on Friday at the valuation of about $10 billion, which is way less compared to the Flipkart's valuation of 15.5 dollars in 2015, the Bloomberg reported citing people familiar with the matter.
Microsoft Corp., EBay Inc. and Tencent Holdings Ltd., were the main backers in this round of funding, according to the report. Flipkart, however, has said it does not comment on "market speculations".
The drop in Flipkart's valuation can be attributed to the intense competition it is facing against US e-retail giant Amazon which has pumped in $5 billion dollars in the next few years.
Flipkart's sky-high valuations was marked down several times last year. In November 2016, Morgan Stanley marked down Flipkart's valuation - for the fourth time in a year - to $5.6 billion. Last year, Flipkart was devalued by Morgan Stanley at about $5.5 billion compared to the $15.2 billion it was valued at in May 2015.
Also, there were management changes with Flipkart's biggest investor Tiger Global Management appointing former eBay executive Kalyan Krishnamurthy to help turn around India's most valuable internet startup.
Till then, the founders, Sachin Bansal and Binny Bansal had a largely free hand. With Amazon India's insatiable appetite for spending money to expand, investors in Flipkart became more cautious.
There was a mass exodus of senior leadership from Flipkart, followed by a quest on how to fill the gap and what the new leadership structure should be like. It took 3-4 months for Flipkart to fix the internal organization and associated strategies and they practically lost this time to do anything significant around growth.