Walmart-backed Flipkart has secured Google as a minority investor for its latest funding round, led by the US-based retail giant. Flipkart has highlighted that the terms of Google’s investment are subject to regulatory approvals and mutual agreement between the two parties.
The e-commerce giant refrained from disclosing the funding amount or the valuation at which Google is investing.
Flipkart said, “Google’s suggested investment and its Cloud collaboration will help in expanding Flipkart’s operations while advancing the modernization of its digital infrastructure to better serve customers across the nation.”
This development comes soon after Flipkart’s Indian marketplace entity received an infusion of INR 1,421 Cr (around $170 Mn) from its Singapore parent in April 2024, just a month following a separate INR 924 Cr ($111 Mn) infusion.
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Both of these investments are reportedly tranches of Flipkart’s substantial $1 billion round, with Walmart pledging $600 million. This investment is purportedly at a 5%-10% premium compared to Flipkart’s valuation of $33 billion during its last fundraising round.
Currently, it remains uncertain whether Google’s investment in Flipkart will finalize this round. Flipkart has not disclosed any other investors in its press statement.
The Google investment aligns with a significant shift at Flipkart.
Recently, Flipkart has diversified its revenue sources through its foray into fintech, offering UPI payments, personal loans, and insurance broking. Within the first month of launching its UPI payments service, Flipkart recorded 5 million UPI transactions totaling INR 197.24 crore in March 2024. However, Flipkart is just one of the numerous new entrants in the UPI market over the past year, necessitating capital to acquire and retain users.
Apart from fintech, the e-commerce titan is aiming to venture into quick commerce and compete with Zomato’s Blinkit, Swiggy’s Instamart, and Zepto. The service is said to be set for launch in a dozen cities before June 2024. The potential benefits of quick commerce have been demonstrated by Blinkit’s growth in FY24, but the sector entails significant capital and operating expenses.
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Grocery stands as a crucial foundation of quick commerce, and there are promising indications for Flipkart in this regard. Flipkart’s current grocery segment experienced a 1.6X year-on-year (YoY) growth in FY24.
For Flipkart to maximize the benefits of its eagerly awaited public listing, profitability in its new business ventures is essential. Internally, the company is reportedly deliberating on the optimal strategy for redomiciling to India ahead of the IPO.
Earlier this month, Kathryn McLay, President and CEO of Walmart International, asserted that the upscale trend in the ecommerce sector is “boosting the stature of the Flipkart business.” Although McLay refrained from dismissing speculations regarding the IPO, she remained noncommittal about the timing of a prospective public offering.
For Flipkart, demonstrating a clear path to profitability is essential, particularly given its lofty valuation and the anticipation surrounding one of India’s largest public offerings for a tech firm. In January 2024, group CEO Kalyan Krishnamurthy reportedly informed employees that Flipkart is nearing profitability, attributing this progress to a substantial decrease in monthly cash outflow. He is said to have highlighted the travel business as a key growth driver for Flipkart.
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