SoftBank, Harder Battles

Why the Japanese investor will have to revisit its gambit of investing in the bellwethers of Indian ecommerce.

- Sayan Chakraborty

In 2017, Flipkart looked like a perfect fit for SoftBank’s outsized shopping bag. By then, Snapdeal, its maiden ecommerce bet in India, had started to flounder and Paytm Mall, the eponymous financial services provider’s ecommerce wing, barely registered a blip in a market dominated by Amazon and Flipkart. In short, SoftBank’s dream of recreating the Alibaba magic — SoftBank founder Masayoshi Son’s $25 million investment in Alibaba at the dawn of the millennium is worth close to $140 billion today, almost twice its $84 billion market cap—looked like a pipe dream.

Flipkart was the remedy to most of his problems. While the firm spent the better part of 2015 and 2016 dodging Amazon’s artillery, Flipkart was still India’s most valuable startup, valued at about $11 billion and the market leader by a fair margin. It was also scripting a turnaround under the leadership of Kalyan Krishnamurthy, an emissary of the firm’s largest shareholder, Tiger Global Management.

It looked like Flipkart could be the right bet to salvage some of SoftBank’s earlier misadventures in India, such as Snapdeal and Housing. Pat came the money from SoftBank’s $100-billion Vision Fund—a mammoth $2.5 billion cheque, the single largest funding round by a homegrown startup. SoftBank ended up owning close to one-fifth of Flipkart through a mix of primary and secondary transactions.

The deal was in line with Son’s vision to buy into the biggest businesses in promising markets. “We want to support innovative companies that are clear winners in India,” Son had said of the deal, which Flipkart co-founders Sachin Bansal and Binny Bansal had described as a “monumental moment”.