Are e-commerce giants, Flipkart and Amazon catapulting and breathing new life to early-stage startups in India? Yes! So goes the report. But why do they turn to early stage startups, when 90% of start-ups are reported to fail within first 5 years 1? Having no dearth of funds, can’t they wait and watch? There are some reasons behind this:
- Presently India is the third largest startup ecosystem. Hence these companies might be looking to ‘Beat the iron when it is hot.’
- The unicorn club of Indian start up is fast growing2 (33 Nos have joined in the first 10 months of 2021)
- They might also be considering the fact that investment in budding startup could gain them the driver’s seat. 3
Helping Start-up Ecosystem Grow
Flipkart and Amazon have designed a few programs like ‘Leap’ (Flipkart) and ‘Global Selling Propel Start-up Accelerator’ (Amazon) to support new start-ups. In addition they are also actively investing as venture capitalists. Let’s see how the action plan looks like:
- Amazon’s ‘Propel Accelerator’ Sirona Hygiene, Slurp farm and Wellbeing nutrition5 got shortlisted and got $50,000 as an equity fee grant.
- Amazon India has also launched $250 million Amazon Smbhav Venture Fund (ASVF) 6 to help start-ups SME in digitization, fueling innovation in agriculture and using technology in finance and health- care.
- Under Leap Program,-shortlisted firms will get an equity fee grant of $25,000 4and an intensive 16-week scaling up training program.
Where are they investing?
Amazon and Flipkart, for sure, are looking for synergies and investing aggressively as venture capitalist which can empower digital retail ecosystem. Well, this may be their secret weapon!
Look at the indicators below:
- Amazon acquired Perpule – the first innovative cloud-based point-of-sale, end to end billing platform for $14.7 million7.
- Amazon has aggressively invested in consumer brand start-up – MyGlamm, Capital float (buy now, pay later & credit platform), Acko insurance, M1xchange, BankBazaar (financial product marketplace) and Housejoy (house services).
- Amazon invested $40 Million from ASVF in Smallcase8, a fintech company offering investment products and forayed into wealth management in August 2021.
- Flipkart has invested in Blackbuck (online trucking platform), PhonePe (digital payment offering), Universal Sportsbiz (fashion brand), Liv.ai (AI based speech recognition), Ninjacart and Shadowfax (supply chain), Zapr (TV analytics) and MapMyIndia. Flipkart also invested in MechMocha, a multiplayer gaming social platform.
There is no looking back since Amazon India first started its journey in 2015 by investing in Qwikcilver (gift cards and beyond) start-up. Its ‘order history’ includes start-ups in digital retail ecosystem with more focus on fintech companies and consumer brands.
Flipkart, however is keener in strengthening its logistics and supply chain and investing in startups from logistics to AI based platform startups. Most of the investment looks promising except few misses like investment in Shuttl (office commute bus aggregator) by Amazon or Nestaway for Flipkart.
Indian retail ecosystem is about to witness a sea change. Amazon and Flipkart, JioMart and Tata Digital may well be the drivers making deep networks and powerful alliances.
Startups carry off two way cutting- provide opportunities for investors and entrepreneurs. For more insights, check out our program @ https://online.ifheindia.org/
Why are Amazon and Flipkart investing so early in start-ups when statistics indicate much higher failure rate of startups?
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- Gunjan, R. K. (2018, July 9). Most Indian startups create jobs, clone western ideas and close down due to lack of funds. News18. Retrieved November 3, 2021.
- Inc42, T., & Staff, I. (2021, October 29). Here are the 33 Indian startups that entered the Unicorn Club in 2021. Inc42 Media. Retrieved November 3, 2021.
- Flipkart and Amazon as venture capitalists: The hits, misses, and strategy pivots. The Economic Times. (2021, August 20).
- Abrar, P. (2020, August 10). Flipkart launches startup promotion programme; May Invest from its fund. Business Standard. Retrieved October 4, 2021.
- Business line (2021, August 13). Amazon announce winners of its India-first start-up accelerator. @businessline. Retrieved October 4, 2021.
- Abrar, P. (2021, April 15). Amazon launches $250 MN Venture Fund for Indian Startups, entrepreneurs. Business Standard. Retrieved October 4, 2021.
- Das, S. (2021, March 31). Amazon is eyeing India’s startups as it gears up for a fight with Asia’s richest man in retail. Business Insider. Retrieved October 5, 2021.
- Bhattacharya, A. (2021, August 27). Amazon’s latest bet in India is a young startup that helps Indians invest in the stock market. Yahoo! Finance. Retrieved October 4, 2021.