Meesho Eyes Larger $500 Mn-$650 Mn Round At Lower Valuation: Report

Ecommerce platform Meesho is reportedly looking to increase the size of its upcoming funding round to $500-$650 Mn from $300 Mn earlier as it has received strong interest from investors.

Out of the total amount, approximately $300 Mn will serve as primary capital designated for settling taxes incurred during the transfer of the company’s domicile from Delaware to India, Moneycontrol reported. The remainder will constitute the secondary component.

“The talks are still on and which investor dilutes how much will determine the final round size but a total of $500 Mn looks likely,” the report quoted a source as saying.

Meesho also initiated discussions with Accel in the past few months for the funding round. However, negotiations between the investor and the company did not materialise, the report said.

Interestingly, Accel was an early backer of Flipkart, Meesho’s primary competitor.

Earlier, reports indicated that the ecommerce startup was in talks to secure $300 Mn from Tiger Global, Peak XV Partners, SoftBank, and other investors.

Tiger Global and Peak XV are expected to lead the ongoing round. SoftBank, WestBridge Capital, and Singapore-based Mars Growth Capital will also participate in the round.

Furthermore, Venture Highway and Meta (formerly Facebook) are said to be among the early investors which will reduce their stake in Meesho during the round.

However, the funding round is likely to value Meesho at $3.9 Bn, a 20% decrease from its previous valuation of $4.9 Bn. This devaluation follows Fidelity’s decision to lower Meesho’s valuation to $3.5 Bn.

Meesho declined to comment on Inc42’s queries on the development on the funding round and decline in valution didn’t receive any response till the time of publishing this story.

It is pertinent to note that Fidelity, in January, marked down the valuation of Meesho on its book, valuing the ecommerce startup at $3.5 Bn, a decline of 29% from Fidelity’s peak valuation of $4.9 Bn for Meesho.

Founded in 2015 by Vidit Aatrey and Sanjeev Barnwal, Meesho, once hailed as the poster child of social ecommerce, made a strategic pivot in 2022 to become a marketplace.

As the ecommerce sector continues to see strong growth in the Tier-II, III cities of India, Meesho is gaining market share and is the fastest-growing ecommerce platform in the country, brokerage Bernstein said in a recent report.

Recently, Meesho announced the launch of an INR 200 Cr (about $25 Mn) employee stock ownership plan (ESOP) buyback programme. It is the largest such ESOP buyback programme undertaken by Meesho and would benefit around 1,700 past and current employees.