NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, February 10, 2016

Alibaba-backed Paytm, one of the bigger e-commerce startups competing against Amazon in India, is raising money again, just months after a reported $680 million round. Sources close to the company say that Paytm is now looking to raise $400 million by June to help with the launch of Paytm’s new payments business, Paytm Payment Bank.

The news comes at the same time that we’ve also heard of some potential consolidation plays. Paytm has been in early talks with Flipkart, India’s e-commerce leader, over how the two could work together more closely to compete better against not only global giants Amazon but large local competitors like Snapdeal.

One option raised was even for Flipkart and Paytm to merge. “Early talks have been about creating a structure where the marketplaces of Paytm and Flipkart could be combined,” a person directly familiar with the early talks told TechCrunch earlier this month.

While dwarfed in size when compared with China, the e-commerce market in India is one of the world’s fastest growing, with eMarketer projecting its value to rise to $55 billion by 2018, up from $14 billion in 2015. Much of this is driven by increased online shopping through mobiles and smartphones.