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Barely ten days after Amazon scripted a soft entry into the Indian ecommerce market with comparison shopping site Junglee, homegrown players have started to feel the pressure of major league competition. Bangalore-based Flipkart, which headlines the second coming of ecommerce in India, has been the first to react. This afternoon, the Accel Partners and Tiger Global-backed ecommerce startup announced the acquisition of Gurgaon-based peer Letsbuy. The details of the deal have not been disclosed, though Flipkart co-founder and CEO Sachin Bansal said in a press statement that the acquisition is a part cash and part equity transaction. Letsbuy’s 350 employees will continue to function independent of Flipkart.

Founded in 2009 by Quasar Media founder Hitesh Dhingra and Amanpreet Bajaj, Letsbuy raised $6 million in Series A funding early last year from Helion Venture Partners, Accel Partners and Tiger Global. The company, says sources in the venture capital industry, has been in the market for a second round of funding for some months. This, however, could not be officially confirmed. It  is likely (though not clear yet) that Letsbuy’s venture capital investors have acquired stakes in Flipkart in exchange for their stakes in Letsbuy. Executives at Helion, one of the investors in Letsbuy, declined to comment on the deal.

Incidentally, Tiger Global is a common investor in Flipkart and Letsbuy. It entered Flipkart in 2010 with a $10 million investment and followed up with a $20 million round last year. An unconfirmed January report by Mint suggests that Tiger Global and Accel (which invested $1 million in 2009) have invested $150 million in the company as part of its fourth round of funding, which values Flipkart at $850 million. It may be recalled that during the latter part of 2011, various media reports suggested that Flipkart was in talks with private equity investor General Atlantic for a similar-sized investment but at a valuation of over $1 billion.

The acquisition announced today indicates that venture capital investors, who poured nearly $400 million into the ecommerce sector in 2011, have also reacted to the Junglee entry. In setting up a platform that essentially aggregates deals from smaller ecommerce sites in India, Amazon now has an inside track on ecommerce in India without the attendant risks. While Junglee drives up its online traffic, the costs of customer acquisition, an area of concern for most local players, delivery of goods and payments (cash-on-delivery requires significant investments in logistics) will be borne by its partners. Junglee’s entry, though a soft launch of sorts for Amazon, potentially turns the ecommerce business in India on its head. Consolidation through mergers and acquisition, or even the shutting down of weaker local players, could dominate ecommerce in 2012. Larger players like Flipkart, on the other hand, will seek to buff up by buying assets. In effect, it will set up the playing field nicely for Amazon when it does make a full-fledged entry.

That makes 2012 a make-or-break year for Flipkart. The Letsbuy acquisition allows it to deepen its presence in electronics, a category it entered last year. Books, the category with which founders Sachin Bansal and Binny Bansal started the company in 2007, now account for less than half of the company’s revenues ($11.2 million for the financial year ended March last year). The company has projected nearly $100 million in revenues for the current financial year. Letsbuy is the Bangalore-based e-tailer’s third acquisition so far. It bought digital content platform Mime360 las year and on-demand publishing firm weRead.com in 2010.

Read our previous posts on Flipkart

• Which way will Flipkart’s Bansals go?
• Is Accel eyeing a 25X partial exit from Flipkart?

Images Courtesy: Flipkart and Letsbuy

Founders of ecommerce companies based in Mumbai got together on Saturday to share their experiences building businesses, the challenges they face and what each of them is doing to address them. The informal meetup, which ended with some excellent wraps from Faasos, a Mumbai-based fast-food startup chain, was organized by Anand Lunia, executive director at Seedfund. The venue for the meetup was hosted by Inkfruit at its offices in Vikhroli.

Participants: Abhishek Shah and Chetan Bafna, Fetise; Nishant Nayak, Natural Mantra; Sheetal Bahl, LensStreet; Manish Taneja, Purplle; Kashyap Dalal, Inkfruit; Nimish Adani, Engrave; Kartik Jain, Infibeam; Anand Anupam, Healthizen; Nitin Purswani, Zepo; Neerja Mittersain, Gourmetco; Elizabeth Chapman, Wonga.

KJ Somaiya Institute of Management Studies & Research and the Pathfinder ECell is hosting a business plan contest, Inception 2012, in February through March. Applications are currently open. The last date for submitting executive summaries of business ideas is February 4. Update: The late date has been extended to February 11.

You can send your summaries to ecell (dot) simsr (at) gmail (dot) com. Shortlisted applicants will be announced on February 11 and mentors will be appointed for the teams on that day.

Here’s a quick look at the rules of the contest:

• Students from management, engineering and other graduate institutions are eligible
• Teams should have a minimum of two members
• No student can be part of more than one team
• No restrictions on the number teams from an institute

The contest is inviting applications in sectors such as mobile applications, cloud computing, alternative energy and ecommerce. The first prize winner will take home Rs 20,000 and the second prize is Rs 10,000. The winners will be announced on March 17.

Editor’s Note: StartupCentral is a media partner for Inception 2012

Delhi-based Indian Angel Network (IAN) has announced an angel investment of Rs 3.25 crore ($600,000-plus) in Mumbai-based Peel-Works, a cloud-enabled sales force transformation and BPO startup. The investment will be used to expand the company’s product offerings, create technology differentiators and human capital. The company will host productized sales force consulting and transformation solutions on the cloud and charge customers on a pay-per-use basis, said a press release.

Peel-Works was founded in 2010 by Sachin Chabra, a former Hindustan Unilever executive. It offers solutions for very large and medium enterprises in the FMCG, telecom and insurance sectors, which have large indirect sales forces. Even though over four-fifth of the sales in these sectors come in through indirect sales forces, the way companies manage this talent is either completely absent or what exists is not commensurate with the significance of their contribution to business results. This creates a dis-engaged sales force which leads to sub-optimal business results and higher operating costs. Peek-Works aims to address this problem with its solutions.

Following the investment, IAN members Srikant Sastri and Sadeesh Raghavan will join the Peel-Works board, said the press release. Other IAN members who are investors in the company include Harish Mehta and Saurabh Srivastava. In 2011, IAN invested nearly $10 million in ten startups including Jigsee, Groffr, and Vayavya.

TLabs, the startup accelerator launched by Times Internet Group, media group Bennett, Coleman & Co’s Internet business arm, is ready to roll out the first batch of incubatees in its 13-week programme. Though the incubator had originally targeted ten startups teams, it will kick off the programme with five teams. Batch I gets into session from February 6.  The accelerator, which focuses on Internet and mobile startups, will invest Rs 10 lakh (approximately $10,000) in each startup in exchange for a 10 per cent stake.

The accelerator requires all teams to be physically present at its premises, which are located in Noida. Ahead of the launch of Batch I, the TLabs team is also putting together a networking event, Bootcamp, for startups, says Abhishek Gupta (in photo), who currently leads the operations of the Accelerator. Gupta, who started his career at Citicorp Information Technology Industries (which later became iFlex Solutions), was vice president-technology at Lime Labs India prior to joining TLabs. Apart from Gupta, the leadership team at the accelerator includes Rishi Khiani, Gautam Sinha and Lalit Bansal.

Here’s a quick look at the five startups in Batch I:

• Bluegape – Order customized posters online and have them delivered to your doorstep
• Dataweave – Discover, monitor and visualize public data on the Internet in a uniform format
• Oravel – Book bed-and-breakfast accommodation online with individuals rather than hotels
• UberLabs – State-of-the-art computer vision-based object recognition platform for digital images
• WiC – User and social networks driven price discovery application

While it gets ready to roll out the first batch, TLabs is preparing for its next batch, which starts in August. “We’re open to ideas even at the concept stage. Though we prefer at least two founders per team, exceptions can be made for promising entrepreneurs” says Gupta. The accelerator has lined up mentors such as venture capitalist Alok Mittal from Canaan Partners, Shashikant Chaudhary who heads telecom at GlobalLogic, Vriti founder Swapnil Srivastav, and venture capitalist Mukul Singhal from SAIF Partners.

Image: StartupCentral