The Flipkart saga should inspire Indian startup ecosystem
Flipkart’s co-founder Binny Bansal and the ecommerce giant’s early investors Accel and Tiger Global have fully exited the firm by selling their stakes to Walmart. Binny Bansal and Sachin Bansal founded Flipkart way back in 2007 when it only sold books online and operated out of an apartment in Bengaluru. In those early days, Flipkart raised $800,000 from Accel in 2008 while Tiger Global invested two years later and both participated in the subsequent rounds. When Walmart bought majority stake in Flipkart in 2018, Sachin Bansal sold his entire stake. However, Binny held onto a minority stake in the company. With the selling of his entire stake now, sources in the know said that Binny has made about $1-1.5 billion from inception to exit. The valuation of Flipkart now stands at close to $35 billion, which was more than two times of the valuation at which Walmart had acquired the domestic ecommerce firm for $16 billion. Meanwhile, Accel made a whopping $1.5 billion to $2 billion from the entire stake sale in Flipkart, which was close to 30 times of its initial investment. Reports indicated that Tiger Global made a total gain of around $3.5 billion from its entire investment in the ecommerce company.
Flipkart is a success story in the Indian startup ecosystem wherein not only founders had made money but also institutional investors made handsome gains. In a market like India, where exits are difficult, Flipkart is a story of inspiration to many. Stakeholders in the startup ecosystem will definitely find some solace in the Flipkart saga. Given the current situation of a prolonged funding winter, founders in the startup world are already in a tight spot. Estimates by PwC indicate that startup funding dropped significantly to $3.8 billion in the first half of this year from $18.3 billion during the same period of the previous year. This was an alarming year-on-year decline of nearly 80 per cent. Owing to funding crunch, firing of employees continued unabated. It is reported that around 70 startups have collectively laid-off more than 17,000 employees in the first half of 2023.
Meanwhile, though the pace of such layoffs has declined, the ecosystem is not out of the woods yet and more firing is definitely on cards. Against this backdrop, public listing of startups seems out of bounds for now. At a time, when the entire startup ecosystem is going through a severe turmoil, the Flipkart news seems comes as a silver lining. In this perspective, all founders should understand that if they build a robust business model, then there will be no dearth of funds. Though Flipkart is yet to be profitable, its business model was able to attract the global retail giant Walmart. Therefore, if the business foundation is strong, it will get wide acceptance among consumers and investors, thereof. Though Flipkart started operations in India when the startup world was finding its feet, it has developed a global model with replicable capability in India. If the current lot of founders can build something local, taking inspiration from global model; there is a high likelihood of success in Indian conditions.