The Flipkart dream: Move aside, make room for nerds
When as a child you were told by your parents to chase the IIT dream, they were not wrong. When as an adult, you chased that dream and grew up a start-up nerd with no life, you should not have been disappointed in yourself. When two years back, doomsday analysts had predicted that Flipkart would see a slow death, they were completely wrong and should be disappointed in themselves today. Two IITians with a start-up dream have made it incredibly big in this country. Mark May 9 as the day.
Flipkart, ironically founded by two former Amazon employees Sachin Bansal and Binny Bansal, defines e-commerce in India. As of April'18, it was valued at a whopping $20 billion. Flipkart is arguably the best India could ever create. The company and its founders are the quintessential Indian dream - owners' pride, and everyone else's envy. And, when everyone had written them off - SoftBank CEO Masayoshi Son has confirmed that Indian start-up ecosystem is seeing its biggest exit.
In the start-up deal of the century, Walmart will roughly buy 71% of Flipkart. It will infuse approximately $2 billion in fresh capital at a valuation of $21 billion, post money. Some of the biggest investors of Flipkart will see an exit - SoftBank may sell its complete 20% stake while Tiger Global and Tencent may retain a part of their stake. Walmart will also bring in Alphabet, the parent company of Google, as a strategic and capital investor.
The 'cynical' self-proclaimed gurus of Indian start-up ecosystem kept finding faults in Flipkart. They were accused of copying Amazon, burning mindless cash, of being myopic and so on and so forth. But, all this while, they kept building for both India and Bharat.
Since Walmart has limited experience in the online e-commerce space, it will let the Flipkart team run the show. Group (which includes Myntra, Jabong, payments unit PhonePe and logistics firm Ekart) CEO Binny Bansal and Flipkart CEO Kalyan Krishnamurthy are here to stay. Chairman Sachin Bansal may exit. Walmart will use its muscle power and smarts to make foray into the grocery space. Further, the entity would move in the direction of IPO, in three years from now.
Meanwhile, Amazon has announced that it would pump in Rs. 2,600 crore into its Indian business unit, Amazon Seller Services. Previously, CEO Jeff Bezos has committed an investment of $5 billion for Indian market. According to reports, India's e-commerce industry will reach $200 billion by 2026, up from $38.5 billion in 2017. In the middle of all this, Indian customers can 'Say Cheese', and so can the Indian entrepreneurs.
Fellow Indian entrepreneur, what does it mean for you and me? It is time for us to rejoice for more reasons than one. In a country, where there have not been any notable exits till date, this deal will certainly improve investors' confidence. With the new arsenal, Flipkart would grow stronger, thereby opening the doors for related smaller start-ups. On a lighter note, you may now be able to convince your parents that entrepreneurship is not half bad, after all.