Flipkart has launched its own corporate venture capital (CVC) fund to invest in early-stage startups in India. Globally, organisations such as Google (Google Ventures), Intel (Intel Capital), Qualcomm (Qualcomm Ventures), Microsoft (Microsoft Ventures) too run such funds to back startups across the world.
Flipkart, once India’s most valued startup is now giving back to the ecosystem. Walmart-owned and Amazon India’s arch-rival Flipkart has set up its own corporate venture capital (CVC) fund to invest in early-stage startups in India. Globally, organisations such as Google (Google Ventures), Intel (Intel Capital), Qualcomm (Qualcomm Ventures), Microsoft (Microsoft Ventures) too run such funds to back startups across the world.
The fund would look at areas related to e-commerce, fintech, payments and complementary spaces, Reuters reported. However, Flipkart hasn’t announced further details related to the fund’s corpus, number of startups to be backed annually, ticket size, equity exchange etc.
“Most companies start making investments from their balance sheets but once they become get certain maturity in such direct investments, they typically set up a separate entity for CVC investments. This is done to simplify procedures in making these investment decisions because otherwise there is a certain approval cycle that goes on for investing through the balance sheet,” Brij Bhasin, General Partner at Rebright Partners told Financial Express Online. Rebright Partners is an Asia focus early-stage VC firm having invested in companies like Inshorts, Docsapp, Tookitaki etc.
Flipkart now being Walmart’s subsidiary probably wanted to set up a specific decision structure that is independent of the operational structure, added Bhasin.
Setting up CVCs does help corporates as well where they can possibly look at acquisition of their portfolio companies in future. However, that’s one of the aspects. “A lot of times it is done so that startups can become complimentary to corporates’ primary businesses,” said Bhasin.
Flipkart has so far acquired 12 companies including its star acquisitions Myntra, Jabong, PhonePe, and eBay India, as per deals tracker Crunchbase. Its two co-founders have also invested in their personal capacities as angel investors in multiple startups.
While Sachin has made 11 investments including the most recent series J funding round of Ola, Binny has 29 investments to his kitty. He has already made three investments this year — Crio.Do, Niramai, and Acko, according to Crunchbase.