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Bangalore: Social commerce startup Meesho Inc., led by Fidelity Investments and Facebook co-founder Eduardo Saverin’s B Capital, raised $570 million in fresh funding, sparking a frenzy of global support for India’s startup ecosystem.
The fundraising has raised the Bangalore-headquartered startup’s valuation to $4.9 billion, more than double what was led by SoftBank Group Corp five months ago. Important It is $2.1 billion. The Japanese company’s other existing investors are Naspers Ltd. of Prosus Ventures and Facebook Inc. has joined the latest funding in the U.S., the startup said in an emailed announcement.
Vidit Atre, Co-Founder and CEO of Meesho, said that India’s leading online retailers have primarily focused on the so-called organized segment which includes branded goods in fashion, home appliances and other categories.
“But 80% of India’s retail, or about $800 billion, is dominated by small manufacturers and local brands in the unorganized sector,” Atre said in a video interview. “That’s the market we’re following, we aim to democratize internet commerce.”
He said the pandemic has accelerated the online shift and Meesho has increased order volume 2.5 times since April. It is targeting users doing 100 million monthly transactions by December 2022 and will use the new funds to double its technology team and grow its roster of products to over 50 million.
Meesho was founded in 2015 by Atre and Sanjeev Barnwal, former classmates of 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 non-branded or little-known producers. Atre said Meesho wants to bring 100 million such businesses online.
Buyers on the platform are mostly middle to low income earners and are from smaller cities and towns. Atre said more than four-fifths of the app’s users are from outside India’s eight largest cities, which is much higher than that of major online retailers. To help buyers in rural communities address “trust and quality” issues, the startup works with female resellers, who curate products and sell them to their social and community circles.
Meesho entered the low-margin, high-frequency online grocery segment earlier this year, starting with smaller towns around Bangalore. It relies on group shopping where community leaders such as housewives and small grocery owners make total purchases to help keep last mile costs down, as individual order sizes can be as low as $1 or $2.
“This is a strategically important segment of online retailing,” Atre said. “Everybody wants a piece of it but no one has cracked it.” -bloomberg
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