Japan’s SoftBank Vision Fund is reportedly in the final stages of talks to lead a $250 million funding round in India’s social commerce startup Meesho, backed by social networking giant, Facebook. With the fundraise, Meesho will enter the country’s unicorn club with a valuation expected to more than double at $2 billion.
The funding will also allow the startup to compete with the likes of Amazon, Flipkart and Reliance Industries Limited’s Ajio.
The startup had previously raised $125 million in 2019 led by Naspers. The Series D round also saw participation from Facebook, Elevation Capital (formerly SAIF Partners), Sequoia Capital, Shunwei Capital, RPS and Venture Highway.
Meesho, which so far raised $215.2 million in eight funding rounds from 22 investors, posted revenues of Rs 307 crore ($42.5 million) in the year ended March 31, 2020. Its losses surged three-fold to Rs 315 crore ($43.15 million).
Founded by IIT Delhi graduates Vidit Aatrey and Sanjeev Barnwal in December 2015, Meesho is an online marketplace that connects sellers with customers on social media platforms like WhatsApp, Instagram and Facebook that have deep penetration in the market. While sellers and customers connect using these social media platforms, Meesho manages shipping and helps them in sourcing.
The Bengaluru-based startup, which competes with players like Dealshare, Glowroad, Shop101 and Kiko TV, claims to have over 10 million resellers and 70 million customers, as per information available on its website. These resellers largely deal with apparel, consumer durables and home appliances.
The Economic Times reported that the startup saw an impact on its revenue due to Covid-19 induced lockdowns last year. However, it has largely recovered its revenues now which is going to help close the latest funding round.
“They (Meesho) are looking to go directly to consumers, which would mean they will compete with other e-commerce players…,” a person was quoted as saying by the publication.
Interestingly, Meesho was embroiled in a fake goods case in India’s Uttar Pradesh state, where both the founders were named in first information reports filed with police.
The $100-billion fund by Softbank recently changed its strategy for the Indian market, and will make smaller and early-stage investments. The fund previously made big-ticket investments in consumer internet firms like Oyo, Delhivery, Grofers, Ola, Paytm and PolicyBazaar in the country. Its total India investments stand at around $11 billion.