Flipkart has got another reality check on valuation. This time from US investment firm T Rowe Price. The investor, which had invested in the e-commerce in 2014, has marked down valuation of its stake in the company by 15 percent to $120.70 from $142.37 per share last year, said a report in the ToI on Monday.
According to the ToI report on Monday, as of March T Rowe Price has valued its stake in Flipkart at $120.70 a share, 15 percent lower than $142.37 late last year. At this price, the company will be valued at $13 billion.
In September 2015, when the company raised $700 million, it was valued at $15 billion.
This latest mark-down of valuation comes close on the heels of the a deeper 27 percent devaluation by Morgan Stanley in February. In 2013, the US financial services firm had invested in Flipkart as part of series D round of funding. In its regulatory filings with SEC, Morgan Stanley valued Flipkart lower at $58.83 million in December 2015 as against $80.62 million in June 2015.
The ToI report notes that the mark down signals the increasing scepticism about valuations of many new-age ventures across the globe. The Chinese slowdown and worries about global economy have already affected the fund flow into the startups.
A report by CB Insights and KPMG on VC investments in start-ups released last week said the investment flow is declining sharply globally. VC investments into Indian start-ups nearly halved to $1.5 billion in the first quarter of 2016, the report said. VCCEdge, the data research platform of VCCircle, said the fund flow has hit a 10-year low.
This is in sharp contrast to the fund flow trends for entire 2015, when according to VCCEdge, PE investments hit a new high at $21 billion against $12.5 billion in 2014. The previous high for VC inflow was $18 billion in 2007.
Clearly, the trajectory has changed within a few months.
The funds crunch has started pinching the start-ups on the operations front. Layoffs have become the name of the game. A report in The Economic Times says that more layoffs are likely in the startups space this year. Last year, a number of start-ups, such as restaurant discovery and food ordering platform Zomato, Foodpanda, food delivery app TinyOwl, Snapdeal, auto online classifieds CarDekho, Housing.com, on-demand delivery start-up Grofers and several others, showed the red slip to hundreds of employees.
Industry analysts cited that cash burn rates were as high as 35 percent in the startups. The companies are forced to cut down spending in order to remain sustainable.
Another reason was that many companies preferred to go in for automation making the large number of employees hired redundant.