When I was at CX Partners, we had a structured credit business as well as a private equity one, although now CX Partners only has the private equity business. We were evaluating many new-age businesses for both strategies, but were simply not convinced to go ahead.

Around 2014, we evaluated investing in Flipkart, but didn’t. The rationale: unless we saw a cash-positive business, we were not convinced. E-commerce businesses were loss-making, and burn rate was very high, giving out freebies to acquire customers. This was also a problem with all new-age businesses at large. No customer was willing to pay a premium for the service that e-commerce companies were providing, and customers at the time were buying online only because of discounts and attractive deals.

I didn’t see this model as a sustainable business model because everything was given at discount, which was funded by private equity investors. Even delivery charges were just about being introduced then and buying at a discount was the only attraction, with nothing to reverse the cash-loss making trend.

Today, after Walmart has acquired Flipkart for more than $16 billion, you could call it a success story. And if we had invested in it at the time, we would have made money by exiting, like a lot of financial investors did. But we didn’t. However, even today, I am not entirely sure of the business model and how it will settle in the future.

The Walmart acquisition has given Flipkart longer legs to prove itself and has given it more time to build a long-term profitable and sustainable business model. We may also have invested had we considered the possibility of a global strategic player (such as Walmart) entering India and killing the competition by acquiring a big online player. Neither did this look likely at the time, nor did the thought of such an acquisition enter our minds. But yes, Flipkart and the e-commerce space has outdone our expectations.