Fidelity marks down Gupshup to $700M amid startup valuation concerns

Fidelity marks Gupshup down for third time

US-based Asset Management Company (AMC) Fidelity Investments, one of the largest investors in the world, has marked down the fair value of conversational messaging unicorn Gupshup to about $700 million.

Fidelity, which acquired a stake in Gupshup in August 2021 for about $16 million, has marked down its fair value as of June 2023 to a little over $8 million. This effectively values Gupshup at $700 million, significantly lower than its last valuation of $1.4 billion.

Fidelity has now marked down Gupshup for the third time since March this year. It had knocked the AI (artificial intelligence) platform used for business communications out of the unicorn club in March, effectively valuing it at $957 million. Later in May, the US-based AMC further marked it down to $887 million.

Fidelity's markdown of Gupshup for the third time in five months highlights how investors are evaluating Indian startups differently in terms of valuation amid a gripping funding winter and at a time when industry watchers have voiced caution about the overestimation of the country's internet market.

Startup founders like Zerodha's Nithin Kamath, PhonePe's Sameer Nigam, and Cuemath's Manan Khurma, along with veteran investors like SoftBank's Rajeev Misra, have recently suggested that founders oversold India's market, especially in 2021 while raising funds.

Besides Gupshup, other unicorns including Eruditus, Byju's, Swiggy, Pine Labs, and Pharmeasy have seen their fair values get marked down by US-based AMCs including Baron Capital and Private Shares Fund, alongside Fidelity.

It is important to note that these adjustments to fair values are typically based on AMC's internal assessment of the macro and microenvironment. They do not necessarily indicate a permanent markdown in the startup's overall valuation.

Founded almost a couple of decades ago by Beerud Sheth, Gupshup claims to serve over 45,000 businesses across their marketing, sales, and customer support automation use cases in various verticals, including BFSI, e-commerce, retail, travel, edtech, and healthcare. Their customers are spread across India, Latin America, Europe, Southeast Asia, the Middle East, and the United States.

Earlier this year, Gupshup launched a new artificial intelligence-powered tool leveraging OpenAI's GPT-3 technology to build advanced conversational chatbots for enterprises.