In case you missed it, Flipkart acquired Letsbuy for ~$20 Million in stock and cash.
I think its a very smart move by Flipkart and the investors (Accel and Tiger Global in particular).
Flipkart is doing about 50 Cr (About $10 Million) per month in sales (approximate, from multiple sources).
Letsbuy was doing about 15 Cr (About $3 Million) per month in sales (also approx).
Flipkart can already do an IPO (I think) in NASDAQ by 2012. But with $150 Million run rate (rather than $120 million), they have accelerated that by about 3 months – 6 months.
So flipkart’s good. They got a good price, they bought some revenues and have a few folks who are category experts (or better experts than their in house ones).
The two companies share 2 investors (Accel and Tiger Global) – who just yesterday announced an investment in Myntra.
So I can easily see a discussion at Accel and Tiger where both Letsbuy and Myntra come up for follow on rounds. They would first have asked Letsbuy to get funding from other VC’s – they apparently did try Sequoia and Matrix, but could not get the deal done.
Letsbuy goes back to Accel and Tiger who realize that Myntra is in a category (apparel, which is a lot more complicated than electronics) which Flipkart will take a long time to get to, but in electronics, Flipkart is mostly there.
So they chose to fund Myntra and consolidate their position with a “clear winner” by getting Flipkart to buy LetsBuy.
I consider Hitesh of Letsbuy a friend, so I may be biased on this one, but I think this is a good outcome for them too. Better to have tried to reach for the stars and climb Kilimanjaro than aim to climb Vindhyas and end up at Nandi Hills.