It seems that Flipkart is on way to acquire LetsBuy*. Flipkart had started as an online retailer of books, and has diversified into almost all key segments including consumer electronics, appliances, gadgets etc. Flipkart, has been rising steadily and growing fast, its initial growth was built on its reputation around efficient service and its cash on delivery service. The company has been able to retain its image of a service oriented firm. The company recently received its fourth round funding of $ 150 Million, on a valuation of $ 850 Million.
Letsbuy had received its first round of funding of $ 6 Million early in 2011, and had been scouting for raising its next round of funding some time back. There were reports of the company looking at raising $ 40 million in funding, which has not been confirmed till date. Letsbuy’s first round of funding was through Helion, Tiger Global and Accel Partners. There are reports that the company has not been able to close on next round of funds, and Tiger Global does not seem too keen to go forward on the company.
All in the family:
It may be interesting to note that Tiger Global and Accel Partners, had also invested in Flipkart. A thought which may be considered more on the lines of hedging their bets by investing in more than one company in Indian e-commerce space **. Flipkart had received $1 million from Accel in 2009, $ 10 Million from Tiger Global in 2009 and another $20 million in 2010. Its present round of $ 150 Million funding is also through its existing investors Tiger Global and Accel Partners.
It is regarded, that there may be pressures driven by the VC’s, driving the acquisition decision. Letsbuy.com, has been able to build a good brand in the gadget, electronics and appliances retail, however would need funds to keep up the growth in the segment. The segment is one of low margin and as with online retail the cost of customer acquisition is quite high. Starting 2011, Flipkart has also moved into consumer electronics, and digital retail category and has been able to leverage its reputation in these areas as well.
Flipkart, headquartered in Bangalore, employs over 4500 – including the logistics team, while Letsbuy.com, headquartered in Gurgaon, would be having about 500 employees on its rolls. Both the companies have been able to build a strong team with strong professionals and understand the business of e-commerce. If the deal goes through, this might be the first step towards consolidation, with two big players coming together.
– Research Team
*The news of a possible acquisition first reported by MediaNama
** Tiger Global & Accel partners have also funded other e-commerce companies in India – Myntra, Caratlane, Exclusively.in etc. Tiger Global, has most recently placed $ 20 Million in Myntra. Accel had participated in earlier rounds of Myntra funding.