Getting Acquired

April 25, 2020

Facebook’s 5.7 Billion dollar investment on Jio platform. who is wining JIO or Facebook?

<p>On April 22nd, there was a media release from RIL.</p> <p>It reads,</p> <p>RIL, Jio Platform and Facebook announced the signing of binding agreements for an investment of ₹ 43,574 crore (i.e 5.7 billion dollars) by Facebook into Jio Platforms for a 9.99% equity stake in Jio Platforms on a fully diluted basis.</p> <p>This is the highest investment, Facebook has ever made to acquire a smaller stake at a company.</p> <p>This investment values Jio platforms at a $65.95 billion dollar pre-money value.</p> <p>Wow! That’s a lot of money.</p> <p>So there comes the next question, Why is Facebook so desperate to acquire a small stake at a company at such an expensive price?</p> <p>To answer this question, let’s go back to the last earnings call at Facebook, where Mark Zuckerberg highlighted some important points.</p> <p>Beyond WhatsApp Payments, we’re working on several other efforts to help facilitate more commerce, from Facebook Marketplace to Instagram Shopping</p> <p>This is such a big space and it’s important for empowering people.</p> <p>so we’re taking a number of different approaches</p> <ul> <li>From businesses setting up storefronts to people for buying and selling to each other directly,</li> <li>people engaging with businesses directly through messaging,</li> <li>and a number of things on payments.</li> </ul> <p>This sums-up Facebook’s ambition clear, they wanted to be the centre of commerce from discovery to payments to delivery.</p> <p>Now, how is this vision related to this investment in Jio platform limited?</p> <p>Answer is JIO Mart.</p> <p>JioMart is an e-commerce platform launched this January by RIL, under its subsidiary Jio platform limited.</p> <p>JioMart app and website will have groceries and many other household items for customers to buy and it will be delivered to the doorstep without any extra charges.</p> <p>It operates on online-to-offline (O2O) business model which means the customers can buy the products directly through the app from nearby sellers.</p> <p>It will connect the offline retailer to online customers which means it does not sell products directly to the customers.</p> <p>The company is targeted to connect 30M, offline retailers with over 200M customers in India</p> <p>Having said that,</p> <p>now both companies align together on the same mission.</p> <p><br></p> <p>Facebook has always been a great facilitator for commerce but haven’t had much success on its commerce business. But this deal could bring a lot of success to facebook and finally moinetize WhatsApp at scale.</p> <p>Jio and WhatsApp together have over 750 million users in India</p> <p>This collaboration, could boost millions of small and medium sized businesses of the country by offering a single platform for shopping, connecting businesses with customers directly and also helping consumers pay for their orders online using the same platform.</p> <p>There are several e-commerce platforms available in the country from BigBasket to Grofers to Amazon and more.</p> <p>The launch of JioMart in collaboration with WhatsApp could pose a threat to these platforms given the popularity of both the platforms.</p> <p>Anyway, for now,</p> <p>we must wait to see what Facebook and Jio are up to with JioMart e-commerce platform.</p> <p><br></p>