Flipkart had agreed to buy Myntra for about $330 million, mostly with company stock. Myntra would continue to operate as an independent entity. For Sachin and Binny, one of the attractions of buying Myntra had been to enlist the services of Mukesh, whom they regarded as an exceptional entrepreneur. Mukesh was given charge of Flipkart’s fashion business and he also retained responsibility of running Myntra.
The deal made Mukesh and his Myntra co-founder, Ashutosh Lawania, very rich men. Mukesh would eventually become one of the largest individual shareholders in Flipkart while Ashutosh would be worth more than ₹150 crore. Myntra’s senior employees, too, received large payouts. It was a big day not just for the two companies but for the entire startup ecosystem. The deal was by far the biggest ever in India’s internet sector. Until now, investors had poured money into startups for many years with almost no returns to show for it. This deal finally offered evidence that, in the end, startup investing could be very rewarding indeed.
In May 2014, a few days after the Myntra buyout, Flipkart made another spectacular announcement: the company had received $210 million in a funding round led by DST Global, a Russian investment firm.4 Headed by billionaire venture capitalist Yuri Milner, DST had made its name by spotting the early promise of startups such as Facebook, Twitter and Alibaba. It was a mark of prestige for Flipkart to bag DST as an investor. As with Naspers and many of its other investors, DST had been introduced to Flipkart by Lee Fixel, who had been investing together with the Russian firm for many years.
Such was the momentum in Flipkart’s business that in less than a year its valuation had more than doubled – to $2.5 billion.
16
A BILLION DREAMS
All technology companies crave the glorious moment in which they can let the world know that they have arrived. It could be with the launch of an exciting new product, a big acquisition, a public listing of shares, or even the hiring of a renowned chieftain.
In 2014, Flipkart experienced not one, but many such moments. By June, the company had already witnessed its most successful product launch with the Moto G phone, become the first Indian e-commerce firm to record $1 billion in gross sales, and completed the buyout of Myntra, a sector-changing deal.
But its biggest moment, one that immediately turned India into a global internet battleground, was yet to come. Less than two months after agreeing the funding round with DST Global, the Bansals ushered in a new era for themselves, for Flipkart, and for Indian startups. In the last week of July 2014, Flipkart announced that it had raised as much as $1 billion.1 This funding round, too, had been orchestrated by Lee Fixel, along with the Bansals. Lee’s firm, Tiger Global, contributed about a quarter of the capital. Other large contributions came from existing investors such as Naspers and Accel Partners and new investors including GIC, Singapore’s sovereign wealth fund. For an Indian company to raise this kind of equity capital in private markets was unprecedented. Not just in India, globally, too, there were just a few other companies that had received such a large capital infusion all at once. For the Flipkart investors, it seemed foolish to pass up the chance to load up a company that was growing so fast. Flipkart, for its part, knew that it needed to arm itself for the long war ahead with Amazon.
Flipkart’s worth now increased to $7 billion, more than twice of what it had fetched only two months ago. It had become one of the most prized internet startups in the world, one of the most valuable private companies in India. Its valuation exceeded that of all other Indian internet startups put together. Until that point, Flipkart had seen itself as a rebellious startup, an underdog with its back to the wall, striving to prove that it was a serious business with seriously big ambitions. It had never been properly accepted as a significant player by corporate India. The big global technology investors, too, had viewed the company, and the Indian market, with something approaching boredom. All of this changed in one moment. The billion-dollar funding round transformed the company’s place in the world. As Sachin summed it up, ‘We were a little kid waiting to grow up. Now we have grown up.’2
That year, a great deal of optimism about India spread both inside and outside the country. After adopting capitalism on its own terms in the early eighties, China had realized a transformative economic boom. Some of the biggest beneficiaries of this boom, and of the Chinese model of state-controlled, nationalistic capitalism, were its internet companies such as Alibaba, JD.com, Tencent and Baidu. In the mid-noughties, more than a decade after liberalization, India, too, looked like it could achieve an economic miracle of its own. But after a promising first term, the Congress government, led by Manmohan Singh, had faltered badly. In the 2014 general elections, Hindu nationalist politician Narendra Modi irrepressibly rose to power as the head of the BJP government. Many voters overlooked his troubling past, when, as Chief Minister of Gujarat, he was criticized for not actively thwarting the 2002 state riots that had led to the massacre of hundreds of people, mostly Muslims. In 2014, Modi, with his slogan ‘Sabka Saath, Sabka Vikas’, was seen as a business-friendly, technology-savvy reformer who would get India back on track and deliver prodigious economic growth.
Welcoming Modi’s victory, business leaders and investors who had been sulking for the last three years, brimmed with hope again. But no company was more ebullient than Flipkart. Why couldn’t two Indians create a great Indian internet firm – this was the ambition that had spurred Sachin and Binny to leave Amazon India and start Flipkart
