Amazon joins India startup story, backs gift cards company

E-commerce giant Amazon has led a $10-million (over Rs 60-crore) funding round in QwikCilver Solutions for a stake believed to be just under 15%. The investment marks Amazon's maiden investment in India's startup ecosystem, having invested in over two dozen companies globally over the past decade.

Existing investors Helion Venture Partners and Accel Partners also participated in the fund raise of Bengaluru-based QwikCilver, which provides end-to-end gift card solutions for retailers and corporate customers.

In June, TOI had reported how the Seattle-based Amazon had begun identifying startups in the tech and internet space in India.

Confirming the fund raise, Kumar Sudarsan, founder and director of QwikCilver said: "The motivation to get Amazon on board was that they will be able to bring in best practices and global strategies to help us scale the sector to the next level." He, however, declined to comment on the quantum of funds raised and the stake that Amazon has picked up in the company.

A spokesperson from Amazon India clarified that the Amazon Asia Pacific, an entity based out of Singapore, has picked up a minority stake in QwikCilver. With a current annualized sales run-rate of Rs 1,000 crore, QwikCilver claims to have about 90% share of the gift-card market in the country.

The average per-person spend on gift cards is pegged at Rs 2,000, with the gift-card market being dominated by physical cards used in offline retail. Estimates shared by QwikCilver, though, suggest intense interest in digital gift cards, a corollary to the country's boom in e-commerce. The company reports a 500% growth in this category in the past two years.

Sudarsan said that some of the funds raised would be directed towards providing mobile solutions for gifting. The company is also considering bringing out a single company branded gift card which could be used by consumers across its client base "We, in fact, have RBI approval to be a prepaid issuer, and very soon we will announce some unique solutions around this."

The six-year-old company has a client base of over 100 retailers, including Shoppers Stop, Titan, Raymond, Hidesign, and Westside. Interestingly, Indian e-commerce poster boy Flipkart is among QwikCilver's top clients. It also has a 300-strong corporate customer base in India offering customized multi-purpose corporate card programs, employee incentives, and benefit card programs, says the company's chief marketing officer, Pratap T P.

Gift cards allow their owners to purchase products of their choice from issuing retailers. Traditional gift cards are physical pieces of plastic, issued by retailers - either for purchase or distributed as promotional items. With the boom in e-commerce, digital gift cards are becoming popular, with a purchasable code taking the place of the physical card.

At present the gift-card market in India is estimated at $500 million (over Rs 3,000 crore) and projected to treble over the next two years. In the US and elsewhere, Amazon has been an active evangelist of the gift card category. Amazon and Apple are the two big issuers of gift cards in the US.