Amazon, Softbank are Battling for Dominance in India

Alicia Cross
August 12, 2017

Those investments have come both through the company itself, as well as the SoftBank Vision Fund, an investment fund that also includes partners such as another fund operated by Saudi Arabia's government.

Flipkart's balance sheet has now been boosted to more than $4bn of cash on its balance sheet.

One of the sources said that once the current round of financing closes, SoftBank Vision Fund would own roughly one-fifth of the company and displace Tiger Global as Flipkart's largest investor.

He also added that even then (if Flipkart and Paytm come together), it will be hard to topple Amazon.

The firm poured $2.5 billion into the e-commerce giant in what the company claims is the biggest ever private funding deal for a tech company based in India.

This investment comes weeks after a possible deal between Flipkart and Snapdeal fell through. "It will not be easy for Flipkart to go against it", he said adding that the world will be ruled by artificial intelligence, robotics and machine learning, and that Amazon is way ahead of the market is using these new technologies to remain the world leader over the next 5-7 years.

Meanwhile, Amazon has been making moves of its own.

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"We're excited to welcome the Vision Fund as a long-term partner as we continue to build our business", Flipkart co-founders Binny Bansal and Sachin Bansal, said in a statement.

Flipkart, which started by selling books on the Internet in 2007, was struggling to raise money until a year ago, hobbled by a tough private funding environment and shrinking valuations. Flipkart now has a lot more cash to splash. In fact, SoftBank Chairman and Chief Executive Officer Son is an early backer of Alibaba, the e-commerce company that dominates China, a market that Amazon has not been able to crack.

"India is a land of vast opportunities", Son said in a statement on Thursday. The deal was reportedly backed by SoftBank, which is the largest investor in Snapdeal.

Flipkart is the biggest ecommerce firm in India, with around 37% market share, according to industry estimates.

The investment also needs to be seen in view of the appeal of the burgeoning Indian e-commerce market. When SoftBank made the offer to invest in Flipkart, it was looking to get the load off of its bad investment in Snapdeal, which did not yield expected returns in the Indian ecommerce space.

It has already invested in ride-haling service Ola, a local challenger to Uber, the largest Internet startup in the world.

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