Meesho raised $570 million in fresh funding led by Fidelity Investments
Social commerce startup Meesho Inc. raised $570 million in fresh funding led by Fidelity Investments and Facebook co-founder Eduardo Saverin's B Capital, adding to the frenzy of global backing for India's startup ecosystem.
The fundraising takes the Bangalore-headquartered startup's valuation to $4.9 billion, more than doubling from five months ago when SoftBank Group Corp. led a round that valued it at $2.1 billion. The Japanese company joined other existing investors Naspers Ltd.'s Prosus Ventures and Facebook Inc. in the latest funding, the startup said in an emailed announcement. India's leading online retailers have focused mainly on the so-called organized segment comprising branded goods in fashion,
home appliances and other categories, said Vidit Aatrey, Meesho's co-founder and chief executive officer.
"But 80% or about $800 billion of India's retail is in the unorganized segment dominated by small manufacturers and local brands," Aatrey said in a video interview. "That's the market we're after, we aim to democratize internet commerce." The pandemic has accelerated the shift online and Meesho has grown order volumes 2.5 times since April, he said. It's targeting 100 million monthly transacting users by December 2022 and will use the new funds to more than double its technology team and increase its roster of products to over 50 million. Meesho was founded in 2015 by Aatrey and Sanjeev Barnwal, former classmates at the Indian Institute of Technology in New Delhi. The startup serves as a platform for small manufacturers and distributors of fashion, lifestyle, small electronics, sporting goods and other products from unbranded or little-known producers. Meesho wants to bring 100 million such businesses online, Aatrey said.
Buyers on the platform are mostly middle to low income and hail from smaller cities and towns. Over four-fifths of the app's users are from outside India's eight biggest cities, a much greater skew than for leading online retailers, Aatrey said. To help buyers in rural communities overcome "trust and quality" issues, the startup works with female resellers, who curate products and sell to their social and community circles.Meesho entered the low-margin, high-frequency online grocery segment earlier this year, starting off in the small towns around Bangalore. It's relying on group buying where community leaders such as homemakers and small kirana owners aggregate purchases to help keep last-mile costs low, since individual order sizes could be as low as $1 or $2.
"It's a strategically important segment of online retailing," Aatrey said. "Everyone wants a piece of it but no one has cracked it."
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