Meesho Secures $300 Million Funding Led by New and Existing Investors

Leading Indian social commerce platform Meesho is poised to secure a significant $300 million investment from a consortium of prominent investors. This funding round marks a critical turning point for several reasons:

• Return of Major Investors: The round is a significant development as it signifies the comeback of two key global investment firms – Tiger Global and SoftBank – to the Indian startup scene. Both firms have been largely absent from Indian investments for nearly 18 months.

• Tiger Global’s First Major Move After Leadership Change: Notably, this investment marks Tiger Global’s first substantial investment in India since the unexpected departure of their private equity head, Scott Shleifer, in November 2023.

• Funding Rarity in Current Climate: The substantial funding amount stands out in the current cautious investment environment. It represents one of the few large funding rounds to materialize in the past year.

Details of the Funding Round

• Investment Leaders: The funding round is co-led by Tiger Global and existing investor Peak XV Partners, jointly contributing $150 million. Peak XV, along with some of its affiliated investors, is expected to contribute an additional $70 million.

• New and Existing Investors Participate: Several other investors are participating in the round, including SoftBank, Singapore’s Mars Growth Capital, and UK’s Think Ventures. The possibility of participation from WestBridge and other investors remains open.

• Valuation and Use of Funds: The current funding round values Meesho at $3.9 billion, reflecting a 20% decrease from its previous valuation of $4.9 billion. A portion of the funds will be used to settle taxes associated with Meesho’s planned shift of its base back to India from Delaware, similar to the strategy adopted by PhonePe in January 2023. Additionally, a small portion of the investment will be used for secondary purchases, potentially benefiting early investors like Venture Highway, Meta, and Y Combinator.

Meesho’s Financial Performance

This funding round comes amidst Meesho’s ongoing financial success. The company has achieved profitability in recent months, reporting a monthly profit of Rs 4-5 crore in July 2023. This profitability follows a significant improvement in FY23, with losses halving from Rs 3,251 crore in FY22 to Rs 1,675 crore. Revenue from operations also grew substantially, increasing by 77% year-on-year to Rs 5,735 crore in FY23.

Competitive Landscape and Strategic Timing

Meesho’s fundraising efforts come as competitors like Flipkart secure significant funding (receiving $600 million from parent company Walmart as part of a larger $1 billion round) and Amazon continues to invest in its Indian operations (with a $100 million infusion in February 2024). The focus on tax-related expenses, rather than extending the cash runway, underscores Meesho’s established profitability.

Looking Forward

Meesho’s successful funding round signifies a crucial turning point for the company, attracting renewed interest from major investors and solidifying its financial position. This strategic move positions Meesho to capitalize on growth opportunities within the competitive Indian e-commerce landscape.