This previous week was full of IPO’s, Acquisitions, and Venture Funds. For this edition of Business News At A Glance, We cover the news of the Coinbase $100 Billion IPO that has shocked Wall Street. Find out what it means for the company going forward. Moving towards Indian business news, Flipkart announced the acquisition of Cleartrip valued at around $40 million. Find out how will this help Flipkart to strengthen its online presence. Flipkart’s competitor Amazon has just announced a $250 million venture fund focusing on SMEs. Who will this venture fund benefit? Know all about it here.
- Flipkart Acquires Cleartrip to Strengthen Its Online Presence
- Amazon announces $250M venture fund focusing on SMEs
- Coinbase soars in its market debut and is valued near $100 billion
Flipkart, an e-commerce platform, has announced the acquisition of Cleartrip, an online travel company.
According to Flipkart, it will acquire a 100 percent stake in Cleartrip, and the Mumbai-based company will continue to function as a separate brand, maintaining all of its employees while collaborating closely with Flipkart on technology solutions. While the terms of the acquisition were not disclosed, the deal is expected to be a mix of cash and equity, likely valuing the online travel agent at around $40 million in what is considered to be a distress sale. All employees of Cleartrip will be retained and work closely with Flipkart to further develop technology solutions to make travel simple for customers.
This acquisition can potentially accelerate Flipkart’s scale in the travel segment. The e-commerce major forayed into the travel segment in 2018 and started to double down its focus on the segment in the year when it partnered with Ixigo.
Flipkart vs Amazon
The Flipkart-Cleartrip partnership comes at a time when Flipkart and its chief competitor Amazon are vigorously driving hotel and travel bookings on their respective pages as they diversify into new services such as food delivery, e-pharmacy, and online financial product sales. Until now, these businesses have mostly established alliances with businesses in industries other than their own. Flipkart had previously partnered with MakeMyTrip, and in 2019 it revealed a similar partnership with Ixigo. Amazon announced a collaboration with Cleartrip to power its flight booking function the same year.
In 2018, Cleartrip added an Alexa integration, allowing users to book flights and hotels using their voice. In May 2019, the Mumbai-based firm collaborated with Flipkart arch-rival Amazon to add flight bookings to Amazon Pay. Amazon and Flipkart both have refused to comment on whether the Cleartrip offering for Amazon Pay will be continued.
Amazon has launched a 'Spotlight North East' programme that aims to bring 50,000 artisans, weavers, and small businesses from eight states in India's North East online by 2025, as well as raise exports of key commodities such as tea, spices, and honey from the area.
The global e-commerce firm that has often been accused by local traders of backing preferred sellers and resorting to discriminatory business practices also launched a slew of initiatives for small businesses. The announcement comes at a time when the American e-commerce group, which has previously invested more than $6.5 billion in its India business, faces heat from government bodies, and the small and medium-sized businesses that it purports to serve.
What Will Be The Focus Of The Fund?
Through the new venture fund, called Amazon Sambhav Venture Fund, Amazon said it wants to invest in startups that focus on helping small businesses come online, sell online, automate and digitize their operations, and expand to customers worldwide.
Two additional focus areas will be:
the Venture Fund aims to invest in Indian startups that are using technology to bring the best products to consumers, make agri-inputs more accessible to farmers, provide tailored agronomy solutions to farmers to improve productivity, distribute credit and insurance to farmers or reduce food waste by building efficient farm to fork supply chains.
The Venture Fund aims to invest in Indian startups that are using technology for doctor assistance, telemedicine, e-diagnosis, AI-powered treatment recommendations, or digitizing operations of healthcare providers such as independent primary care clinics, diagnostic labs, pharmacy value chain, or specialty doctor clinics for improving access to a wider patient base agnostic of physical geographic location. Additionally, the Venture Fund will continue to invest in technology start-ups focusing on other sectors and themes as well where we can positively influence the livelihoods of SMBs.
Today, more than 2.5 million MSMEs work with Amazon, including sellers, artisans, and weavers, delivery and logistics services, etc.
Coinbase made a rousing debut on Wall Street, with the digital currency exchange's first trade of $381 giving it a market value of $100 billion. The company's listing on a public stock exchange is seen by some as an inflection point for digital currencies, as Coinbase's fortunes are closely tied to Bitcoin, the most popular cryptocurrency.
Coinbase, whose users primarily deal in bitcoin and ethereum, reported last week that its revenue soared 847% in the first quarter to $1.8 billion and that it now has 56 million verified users.
Even though Coinbase’s revenue surged over the past 12 months, the company has little to no chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation of $100 billion
Coinbase’s expected valuation of $100 billion implies that its revenue will be 1.5 [times] the combined 2020 revenues of two of the most established exchanges in the marketplace
Experts opine that investors need to have a long-term investment strategy with at least a one-year horizon in bitcoin, which could still go to zero by some bearish accounts, but a three-year outlook is better because the crypto complex has tended to operate in three-year cycles of boom and then bust.
Coinbase is seen to have more users and more revenues than many of the largest Wall Street players and is more profitable than any major exchange, and this validation has put most skeptics at a crossroads [of] having to re-evaluate their denial and frustration with the disruption coming at them from all sides.
All this being said, the Coinbase listing can be viewed as an additional validation of the space, and a major PR opportunity for the entire industry to shine as the future of finance.
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