Google Backs Flipkart In Walmart-Led Funding Round

Walmart-owned Flipkart has brought Google on board as a minority investor as part of the funding round led by the US-based retail giant. Flipkart said Google’s investment deal is subject to regulatory approvals as well as terms that both parties need to agree upon.

The ecommerce giant did not disclose the funding amount or the valuation at which Google is investing.

In a statement, Flipkart said, “Google’s proposed investment and its Cloud collaboration will help Flipkart expand its business and advance the modernisation of its digital infrastructure to serve customers across the country.”

The Google investment comes soon after Flipkart’s marketplace entity in India got an infusion of INR 1,421 Cr (around $170 Mn) from its Singapore parent in April 2024, just a month after an INR 924 Cr ($111 Mn) infusion.

Both these infusions are said to be tranches of Flipkart’s massive $1 Bn round, where Walmart is committing $600 Mn. This investment is said to be at a 5%-10% premium to Flipkart’s valuation of $33 Bn at the time of its previous fundraise.

At the moment, it’s not clear if Google’s investment in Flipkart will close this round. Flipkart has not indicated any other investors in its press statement.

Google Backs Flipkart’s New Direction

The Google investment coincides with a major shift at Flipkart.

In recent months, Flipkart has added new revenue streams thanks to its entry into fintech, with UPI payments, personal loans, and insurance broking. In its first month after launching its UPI payments service, Flipkart recorded 5 Mn UPI transactions worth INR 197.24 Cr in March 2024. But Flipkart is just one of the many new players that have entered the UPI race in the past year, so it will need capital to acquire and retain users.

Besides fintech, the ecommerce giant is looking to foray into quick commerce and take on Zomato’s Blinkit, Swiggy’s Instamart and Zepto. The service is reportedly going to launch in a  dozen cities before June 2024. The upside from quick commerce has been proven by Blinkit’s growth in FY24, the category involves high capital and operating expenditure.

Grocery is a critical pillar of quick commerce, and there are some encouraging signs for Flipkart in this context. Flipkart’s existing grocery vertical saw 1.6X year-on-year (YoY) growth in FY24.

Profitability in the new lines of business is vital for Flipkart if it’s looking to make the most of its highly-anticipated public listing. The company is said to be conducting discussions internally on the right strategy to redomicile to India ahead of the IPO.

Earlier this month, Walmart International president and CEO Kathryn McLay claimed premiumisation in the ecommerce category is “lifting the profile of the Flipkart business”. And while Mclay did not deny speculation about the IPO, she was standoffish about the timing of a potential public listing.

It will be critical for Flipkart to show some path towards profitability especially because of its high valuation and the expectations around one of the largest public issues for a tech company in India. In January 2024, group CEO Kalyan Krishnamurthy is reported to have told employees that Flipkart is nearing profitability on the back of a significant reduction in monthly cash burn. He is said to have credited the travel business as being a growth engine for Flipkart.