In 2007, Sachin and Binny Bansal worked as engineers for Amazon.com AMZN +2.21%, helping the Seattle-based company build out its operations in their native India. Seven years later, the two Bansals find themselves in the middle of a war with their former employer. And they seem to be winning.
As the cofounders of Flipkart, the pair has created the dominant online retailer in India, a fledgling e-commerce market that’s been flooded by capital as global investors seek the next Alibaba Group. On Saturday, Flipkart announced that it had raised $700 million from investors including T. Rowe Price Associates and the Qatar Investment Authority, valuing the Bangalore-based internet firm at $11 billion, according to sources close to the company.
That investment has turned the Bansals, who are not related, into two of India’s wealthiest people. With their equity in the company totaling more than $940 million each, the pair are close to becoming billionaires, a remarkable sign of the investor confidence in India’s online retailing potential and an affirmation of Flipkart’s dominance in the region.
In a year full of landmark deals, Flipkart took in more than $1.9 billion of outside money in 2014, second only to ride-hailing service Uber Technologies in venture capital raised by private technology firms this year. That’s been the standard of business in Indian e-commerce, where tech giants and upstarts alike are lining their pockets to fight for a market that will only see $3.2 billion-worth of goods sold online in 2014, according to Forrester Research. For perspective, India’s three largest e-commerce players–Flipkart, Amazon and Snapdeal–raised or committed more than $4.7 billion total this year toward their respective developments.
To understand why, one needs only to look at the record-breaking initial public offering of China’s Alibaba Group in September. Now valued on the public market at more than $275 billion, Alibaba is an affirmation of the power of emerging markets as populations move online to conduct their everyday business.
“If you look at India, organized retail did not put a strong foot forward,” said Vamsi Vutukuru, a Bangalore-based executive at retail analytics firm Boomerang Commerce. “The vast population in India is making the leap from disorganized retail to e-commerce and Amazon and Flipkart can capture part of the overall retail space, not just online commerce.”
While seven-year-old Flipkart may be aiming for the heights of Alibaba, it will take years before it reaches the level of its Chinese counterpart. Forrester analyst Satish Meena estimates that the Indian company will do $2 billion in gross merchandise volume by mid-2015. In comparison, Alibaba facilitated $248 billion-worth of commerce last year alone.
Much of that can be attributed to the differences in models between the two. Alibaba maintains various marketplaces for retailers to hawk their wares, while Flipkart’s Amazon-like approach of maintaining inventory and controlling logistics will take longer to build and perfect. Moreover, India will much be much slower to adapt online commerce. Forrester projects that $16 billion-worth of goods will be sold online in 2018.
Flipkart also faces impediments from their well-armed competitors. The leaders of Snapdeal, financed by Alibaba’s largest shareholder in Softbank , have reportedly met with Alibaba’s Jack Ma and are also backed by the likes ofeBay EBAY +0.35%. There’s also Amazon, who once lagged in the market, but has quickly made up ground with heavy marketing and a $2 billion commitment to Indian operations from CEO Jeff Bezos.
“India is a perfect example where we’re taking free cash flow that we’re generating in other businesses and we’re investing,” said Bezos in an interviewduring a visit to the country in October. “We wouldn’t invest this much–we wouldn’t invest $2 billion–if there wasn’t evidence that it was working.”
While their former boss looms, Flipkart CEO Sachin Bansal and COO Binny Bansal know they are the clear market leaders, with about twice as much business as Amazon or Snapdeal, according to analysts. Both 33, they were classmates at the Indian Institute of Technology in Dehli and were inspired by the Silicon Valley success stories to start their own company. While they both worked at Amazon, they were dismissive of the online retailer’s influence on their entrepreneurial approach.
“Even if we were working in any other company, we would have started this business,” Binny Bansal told India Today in 2013. “It is more the opportunities in India that excited us.”
The Bansals declined to comment through a spokesperson for this story.
In raising its most recent round, Flipkart disclosed its cofounders’ stakes in financial documents filed in a Singapore, where the company is incorporated. Local regulations stipulate that once a company has more than 50 shareholders it must make certain information public, though Flipkart maintained that the disclosures are “in no way indicative of any upcoming IPO.”
According to documents (which are detailed simply here by Quartz) the Bansals each own just under 46% of outstanding common shares or about 8.6% of the total shares outstanding. At an $11 billion valuation for the company, their stakes are worth more than $940 million.
With more than $2.45 billion in investment raised, those close to the company said to expect future investment rounds as it continues to grow. With 20,000 employees and 26 million registered users, Flipkart’s valuation–and its cofounders’ net worths–may yet rise as it bolsters those figures.
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