BENGALURU/MUMBAI: Flipkart has set up an internal fund to invest across early-stage startups, in the first such move by the ecommerce major, according to three people familiar with the matter. The Walmart-owned etailer plans to back young companies across financial technology, supply chain, SaaS, among other strategic areas as it looks to get a foothold in these startups. The fund is estimated to be $60-100 million in size and will be led by Emily McNeal, the group CFO of Flipkart.
The capital for the fund will come from Flipkart’s balance sheet and will see the etailer cut cheques of about $2-3 million, ET has learnt.
While Flipkart has been investing in and acquiring startups through its Mergers & Acquisitions (M&A) team, this is a more structured approach by the online retailer to take early bets at lower valuations to leverage technologies for its businesses. The online retailer will put together an investment committee similar to an investment fund and bulk up its M&A team which will scout for these opportunities.

Flipkart’s M&A team is being revitalised with fresh talent and new leadership, said one of the persons quoted above. “The preliminary size of the fund is between $50-60 million, but it could go up depending on their appetite for investment,” said the person mentioned above. “They will look to pick up anywhere between 20-25% stake in these early-stage companies in return,” the person added.

People in the know said that Flipkart, which has made acquisitions like Myntra, Jabong and PhonePe, along with investing in many other companies, may use the funds to specifically target startups in areas like personal loans, check out finance and those which can lend to SMEs. “Amazon has moved rapidly on the lending business, they have started cardless EMIs and also partnered with multiple banks and large fintech startups to extend loans to their sellers,” said one of the persons quoted above. “With this fund, Flipkart could attempt to double down on the lending space, which they had tried with no-cost EMIs,” said the person.

In an emailed response to ET’s query, Flipkart’s McNeal said, “Flipkart’s innovations have helped create much of the ecosystem on which the Indian ecommerce industry has thrived over the past decade. We are seeing startups today trying to solve unique challenges that could help bring millions more into the digital fold helping contribute to the ‘Digital India’ programme. With this initiative, we are delighted to support such innovative early-stage startups that are working on nextgen technology in and around our ecosystem.”

McNeal did not comment on the size of the fund or which areas it would look to deploy the company’s capital in. Walmart acquired a 77% stake in Flipkart last year valuing the Indian etailer at $22 billion. Flipkart’s rival Amazon has invested heavily in the fintech space including Capital Float, an SME-lending startup, insurtech player Acko Technologies and ToneTag which facilitates contactless payments.

Source: gadgetsnow.com