Meesho more than doubles its valuation after $570-million funding
ET first reported that the social commerce startup
was in talks to close a new financing round which will see it on board Fidelity and B Capital on September 24. Existing investors SoftBank Vision Fund, Prosus Ventures, and Facebook have also participated in the round.
Other new backers include Footpath Ventures and venture debt fund Trifecta Capital, the company said. Interestingly, Trifecta Capital has made an equity investment in the company.
In April, Meesho
was valued at $2.1 billion when it raised $300 million from SoftBank Vision Fund, which was its larger financing round.
“We have grown three times in terms of number of orders over the last two quarters. The business has continued to expand at a very rapid pace. We’ve been adding more categories and catalogues…We have now become a pure horizontal platform where people can find anything they want,” co-founder and chief executive Vidit Aatrey told ET.
From clocking 20 million monthly orders in March this year, Aatrey said Meesho had registered about 45 million orders in August. The company said it had 15 million transacting users in the same month. The social commerce firm is looking at an almost seven-fold increase in its monthly transacting customers taking it to 100 million by December 2022.
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Founded in 2015 by Aatrey and Sanjeev Barnwal, Meesho began life as a reselling platform for women entrepreneurs. This year, Meesho also started to focus on selling directly to consumers through and compete directly with Walmart-owned Flipkart and Amazon India,
ET reported on April l3.
“We realised that more people want to buy directly. And that number was going up massively. So we redesigned the app to also serve such consumers. We continue to see a strong platform for women entrepreneurs. A very unique thing about our business is to tap direct consumer demand as well as reach out to those consumers who are still not comfortable coming and buying directly from us ” he added.
Meesho will use the fresh capital to double its research and development team and acquire more users. The Bengaluru-based startup will also invest a significant chunk of the capital in its grocery marketplace Farmiso, which it launched earlier this year and has been hiring for it aggressively.
ET reported in its story last week that Meesho’s cash burn is currently at $20-$25 million per month to acquire new users.
The company operates in the community group buying model driven by leaders. Social commerce platforms like DealShare and Citymall also sell through a similar model.
“Conventional grocery models have very high logistics costs and that’s why you will see all your existing logistics companies even after many years, are only functioning in the top 4-8 cities,” said Aatrey. “When you leverage the community leaders model you’re able to serve this customer with very low ticket sizes, and offer them pricing while having a very strong unit economics base. We will continue to focus on small town and cities..and capture the entire online grocery demand.”
Meesho’s latest fundraise comes at a time when it is battling a spate of fraudulent and unconsented orders on its platform. Aatrey recently announced a slew of steps — including the appointment of consultant Deloitte —
to conduct a forensic audit and investigate the issue.
“Deloitte has investigated and we found out who was doing. We have taken legal action against them and all of taken them off the platform.. For the last one and a half months, we haven’t seen a single escalation anywhere. I think it was just a few resellers who were trying to take advantage of the opportunity..” he added.
Commenting on the fundraise, Kabir Narang, founding general partner at B Capital Group said in a statement, “Meesho’s business model has a compelling value proposition with entrepreneurs, end customers, and suppliers consolidating on one platform. It has rapidly emerged as a leading player in this space. Meesho is now enabling 100 million SMBs across tier 2+ cities, empowering them to sell online, leveraging its digital commerce platform.”