Tiger Global, SoftBank set to end funding winter with $300 million round in Meesho

Vidit Aatrey (Left), co-founder and CEO, and Sanjeev Barnwal co-founder and CTO, Meesho

E-commerce platform Meesho is set to raise $300 million from a clutch of investors that includes Tiger Global and SoftBank, two of the world's most prolific technology investors that have shied away from investing in India for nearly 18 months now. At least three sources familiar with the development told Moneycontrol that existing and other investors, such as Peak XV Partners and Mars Growth Capital, will also participate in the round.

Not only will the large ticket round - a rarity during the current funding environment - mark the return of Tiger Global in India, but also be the investor’s first major round since Scott Shleifer, head of private equity, abruptly stepped down in November last year. Once complete, Meesho’s $300-million round will be among the very few large rounds that have materialised over the last 12 months.

Meesho’s latest round is being led by Tiger Global and Peak XV Partners, who are together putting in $150 million, one of the people cited above said. It is also understood that Peak XV, along with some of its limited partners (LPs), is likely to pump in $70 million, the source added.

While Tiger is a new investor in Meesho, Peak XV is an existing backer that had first invested in the e-commerce firm in 2018.

The current round values Meesho at $3.9 billion, 20 percent lower than $4.9 billion valuation it commanded during its previous fundraise in 2021. The reduction in value comes after Fidelity cut Meesho’s valuation to $3 billion, Moneycontrol reported in January.

The remaining $150 million will come from at least three other investors. SoftBank, which is infusing $30 million, Singapore’s Mars Growth Capital, UK’s Think Ventures will put in the remaining amount. It is possible that WestBridge and other investors also participate in the round.

While SoftBank is an existing investor and will put in more money to retain its stake in the company, Mars and Think will be funding Meesho for the first time.

“Meesho is in the process of flipping its base back to India from Delaware and a bulk of the fresh capital will be used to pay the relevant taxes ahead of its planned IPO,” a second person cited above said.

This is similar to $1 billion that Walmart-owned PhonePe paid while flipping its base from Singapore to India in January 2023 ahead of its IPO.

Meesho's $300 million round will largely consist of primary capital but also have a small portion of secondaries which will be used to buy out early investors. Venture Highway, Meta (formerly Facebook), and Y Combinator are a few of Meesho’s early backers, as per Tracxn, a private markets data provider, sources told Moneycontrol.

Tiger Global, SoftBank, Peak XV, and Think Ventures did not reply to Moneycontrol’s email seeking details. Meesho declined to comment citing its internal policy.

Strategic timing

Meesho’s fundraise comes at a time when rival Flipkart has already received $600 million from parent Walmart as part of a larger $1 billion round. Even US-based Amazon infused $100 million into its India entity in February 2024 as companies look to grab a bigger piece of the e-commerce pie.

Requiring fresh capital for tax-related purposes and not to extend its cash runway is understandable as Meesho has been profitable for a few months now. It reported a monthly profit of Rs 4-5 crore in July 2023 and has largely remained profitable since then, CFO Dhiresh Bansal had said earlier.

The turnaround was after the company had already shown an improvement in FY23. In the previous fiscal year, Meesho halved its losses to Rs 1,675 crore from Rs 3,251 crore in FY22. At the same time, the company said its revenue from operations grew 77 percent from Rs 3,232 crore in FY22 to Rs 5,735 crore in FY23, as existing customers transacted more on the platform and monetisation efforts yielded desired results during the year.