The startups currently in talks with Walmart operate in areas of deep tech, platform-as-a-service, social networking, retail technology etc. and is likely to help Walmart build new products.
Flipkart’s parent Walmart is eyeing acquisition of multiple startups out of close to a dozen early-stage startups it is in talks with primarily to boost their pool of talent, according to three sources familiar with the development told Financial Express Online.
“At least 8-10 very early-stage startups have been approached by Walmart India in the last three-four months. Walmart is looking for entrepreneurial talent primarily hoping to build great technologies and products,” said one source without disclosing the names of the startups.
Walmart’s hunt for Indian technology talent gains significance amid its ambition to “take e-commerce to next 200-300 million customers in India, and bring a great selection through right affordability construct to consumers in the country, ” Rajneesh Kumar, Chief corporate affairs officer, Flipkart Group had said in a company statement in May this year during Walmart’s CEO Doug McMillon visit to Bengaluru to meet Flipkart team.
These startups operate in areas of deep tech, platform-as-a-service, social networking, retail technology etc. and is likely to help build Walmart new products.
“Walmart is working on a marketplace kind of a solution for which it is in talks with startups,” said another source.
Walmart said that it shall get back with comments for this story.
The discussions with the majority of the startups are at a preliminary stage having held one or two rounds of discussions. However, Walmart is about to close the deal with one startup, which is into hyperlocal social network space that helps people in the neighbourhood connect with each other based on their interests, the source added.
“The final discussions on deal terms are going on with the social network startup around whether the IP would be retained, founders would stay back or not etc. and also whether they can operate independently,” the source said.
The deal is likely to be an acqui-hire where intellectual property rights and the product would stay out of Walmart portfolio.
The startup, which helps businesses build and run serverless applications through its platform-as-a-service model, had also met Walmart in May for an ‘assessment’ meeting where the discussions were around product etc., the third source said.
The amount to be spent by Walmart in acquiring such startups is in the $100k-200k range since these startups were launched recently and they are targeted for talent mostly, the source added.
However, for these young startups, even $100-200k is a lot of money while they also get a tag of getting acquired by Walmart to their credentials to then build something new with better visibility for themselves.
At Walmart, working with an entrepreneurial mindset is very different from an employee mindset as former thinks of what new he/she could create and markets to be targetted. The attitude makes a big difference, said an industry expert.
Walmart had recently stated in April 2019 quarterly report that it has earmarked around $1.2 billion out of its $2.7 billion in cash and cash equivalents as on April 30 this year to “fund the operations of Flipkart,” the company had said in its quarterly (ending April 30, 2019) report filing with the US Securities and Exchange Commission last week.
“Of the $2.7 billion at April 30, 2019, approximately $1.2 billion can only be accessed through dividends or intercompany financing arrangements subject to approval of the Flipkart minority shareholders; however, this cash is expected to be utilized to fund the operations of Flipkart,” according to the filing seen by Financial Express Online.