One of the worst-kept secrets in India’s e-commerce industry was finally outed yesterday as Flipkart, a broad-based e-commerce firm in India, said it was buying fashion e-tailer Myntra in an all-stock deal reportedly valued at about $330 million: Quartz
Many of us in the industry have watched Flipkart acquire companies and see a pattern. A few years ago, Flipkart acquired the music content assets of a VC-funded firm called Chakpak. The rest of the firm was bought by another VC-funded firm, Trivone. Flipkart shut down the part it bought. Meanwhile, Myntra, itself a VC-backed entity, acquired another VC-funded fashion brand, Sher Singh. Flipkart then went ahead and bought yet another VC-backed e-commerce player, LetsBuy, and shut it down too—despite its earlier assurances that it wouldn’t. All of this culminated in Flipkart buying Myntra yesterday.
Again, we’re told that there’s no intention to shut it down.
Look under the surface, you’ll see that every single one of these firms—Chakpak, Trivone, Sher Singh, LetsBuy, Myntra and Flipkart—was funded by the same VC, Accel Partners. The bigger firms here—LetsBuy, Myntra and Flipkart—also had a second investor in common, the New York hedge fund Tiger Global. Calculations indicate that at the time of the purchase, investors owned more than 80% of each firm, so the founders were probably down to low-single-digit shareholdings in the merged Accel-Tiger e-commerce entity.