Flipkart and Ola’s protectionist calls put Tiger Global, SoftBank in a spot
Bengaluru: The founders of Flipkart and Ola have called for government protection from their deep-pocketed US rivals Amazon and Uber, but such demands have put their main funders in a strange position. Tiger Global Management owns roughly a third of all Flipkart shares as well as a smaller stake in Ola, but has invested more money in Amazon and Uber.
SoftBank Group, Ola’s largest investor, has an indirect but significant exposure to Uber through China’s Didi Chuxing. The Chinese cab hailing service bought the local business of Uber last August, becoming a shareholder in Uber and in turn bringing Uber on board as its largest investor.
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Not surprisingly, neither Tiger nor SoftBank has endorsed the demands made by the founders of their portfolio companies.
Tiger Global didn’t respond to an email seeking comment. SoftBank declined to comment. Meanwhile, the chorus for protection is growing.
Led by Flipkart co-founder Sachin Bansal, some start-ups and their investors are working towards forming a lobby group that will represent the interests of Indian consumer Internet companies, Mint reported on 28 October.
In December, Bansal and Bhavish Aggarwal, co-founder of Ola (run by ANI Technologies Pvt. Ltd), said at a conference that India needs to create a level-playing field for start-ups to compete effectively against global companies with significantly larger capital.
Their calls were echoed by some influential investors.
In late January, Vani Kola, founder of venture capital firm Kalaari Capital, which is an investor in another Amazon rival Snapdeal, wrote on Medium supporting the calls for government protection for Indian start-ups. Kola suggested that India should force Amazon and Uber to sell their products and services at “positive gross margins and net take rates”. She also said that after a certain unspecified period of time, foreign companies operating in India must be required to raise capital separately for their Indian arms.
In December, Tarun Davda, managing director at Matrix Partners, an investor in Ola, wrote a separate piece on Medium saying Amazon and Uber should be stopped from employing a “strategy of capital-dumping” and be forced to “compete fairly”.
Tiger Global currently holds 1.38 million shares of US-listed Amazon, according to a February filing with US Securities and Exchange Commission. Given the current stock price of Amazon, that stake is worth nearly $1.2 billion, slightly higher than the amount that Tiger has invested in Flipkart. (To be sure, Tiger’s stake in Amazon fluctuates as it can freely buy and sell Amazon shares on the stock market.)
Tiger has invested less than $120 million in Ola. Its exposure to Uber is significantly higher. Tiger co-led a $2 billion-plus investment round in Uber, according to a December 2015 report in Fortune. Additionally, Tiger is an investor in Didi Chuxing.
Flipkart’s main holding company Flipkart Ltd is incorporated in Singapore.