L-R Vidit Aatrey, Founder & CEO and Sanjeev Barnwal, Founder & CTO, Meesho
Social commerce platform Meesho on September 30 said it has raised $ 570 million in its Series F round led by Fidelity Management and B Capital, more than doubling its valuation to $ 4.9 billion in five months, the latest sign of the funding frenzy underway for Indian startups.
While existing investors Prosus Ventures, SoftBank Vision Fund 2 and Facebook also participated in this round, other new investors include Footpath Ventures, Trifecta Capital and Good Capital among others. No investor sold their stake in this round.
Meesho runs a three-sided marketplace with suppliers, resellers and the customer, where the reseller buys goods such as unbranded fashion items from the supplier and sells it via platforms such as WhatsApp and Instagram. While Meesho started out this way, its share of direct sales has also been going up, pitting it directly against incumbents Flipkart and Amazon.
The new funding round comes months after Meesho raised $ 300 million led by SoftBank Vision Fund 2, valuing it at $ 2.1 billion. Meesho said since the last round of funding, its order volume grew 2.5 times and it has also added new product categories such as sports and fitness, pet supplies and automotive accessories.
“We just have grown very fast and the business has grown very fast. There was a lot of inbound interest from investors and the market environment is also great in terms of capital,” Vidit Aatrey, co-founder and CEO, told Moneycontrol in an interview.
Meesho wants to reach 100 million monthly transacting users by December 2022 and will use the funds to grow its technology and product talent, apart from increasing its selection to 50+ million products.
According to a note by Bernstein released on September 27, 2021, Meesho is India’s largest social commerce platform with over 13 million resellers, 45 million customers and over 1 lakh suppliers.
Led by a surge in penetration of social platforms such as WhatsApp and Facebook, social commerce is growing at a faster rate than traditional e-commerce. Walmart-owned Flipkart recently forayed into this category with the launch of its Shopsy app, and SEA-owned Shopee is also making plans to expand in India.
“Our focus has always been on bringing small businesses online but there are also a lot of people coming directly and buying from us. We will use both approaches – consumer and entrepreneur marketplace, going forward,” Aatrey said.
While fashion accounts for half of its gross merchandise volume (GMV), followed by beauty and personal care, Meesho is also looking to increase grocery and FMCG offerings by expanding its community group buying business Farmiso (Meesho Grocery), to over 200 cities.
“We want to be one platform that serves all possible categories. We have added categories such as sports, accessories, pets and the next significant frontier is grocery,” Aatrey added.
Kabir Narang, Founding General Partner at B Capital Group, said, “We are excited about Meesho’s focus on strong unit economics and a consumer-first approach. Its business model has an incredibly compelling value proposition with entrepreneurs, end customers, and suppliers consolidating on one platform.”
Aatrey declined to share Meesho’s revenue, but said it has always had positive unit economics- as in it makes money on every order, but fixed costs are rising because it is investing more in the business.