Flipkart announces new program to back early stage startups

The fund’s investments will target companies working in areas related to e-commerce, FinTech, payments and complementary spaces.

Multi-billion corporates in India are having dedicated funds to invest in startups for quite some time but large-scaled startups have shied away from doing so. However, Flipkart is trailing a blaze by setting up a $60 to $100 million fund to make strategic investments around its ecosystem.

Flipkart has set up an internal fund to invest across early-stage startups to seed innovation in areas related to e-commerce ecosystem, the company said in a statement. Probably, this is the first instance where e-commerce firm in India has structured a dedicated fund for investments.

The e-commerce marketplace plans to invest majorly in areas including fintech, Saas and supply chain and aims to take up sizeable stake (close to 20-30 per cent) in early-stage startups in return.

The ecommerce giant has been making investments through its mergers and acquisitions (M&A) team. With the launch of the fund, the company is looking to make a structured move to take early bets at lower valuations to leverage technologies for its businesses.

According to ET sources, the company will also put together an investment committee similar to an investment fund and bulk up its M&A team which will look for these opportunities. The company is also looking to ramp up the team with new talent and leadership.

In an interview, Brij Bhasin, General Partner at Rebright Partners said " Flipkart now being Walmart’s subsidiary probably wanted to set up a specific decision structure that is independent of the operational structure. Setting up CVCs does help corporates as well where they can possibly look at acquisition of their portfolio companies in future. However, that’s one of the aspects. A lot of times it is done so that startups can become complimentary to corporates’ primary businesses”.

Flipkart has so far acquired 12 companies including its star acquisitions Myntra, Jabong, PhonePe, and eBay India, as per deals tracker Crunchbase. Its two co-founders have also invested in their personal capacities as angel investors in multiple startups.

With this internal fund, Flipkart may target startups working in areas such as personal loans, check out finance and those which can lend to SMEs to counter rival Amazon.

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