Meesho, an Indian social commerce with 150M transacting users, secures $275M in new funding

Meesho, a leading e-commerce startup in India with about 150 million transacting users, has secured $275 million in a new funding round, it disclosed in a securities filing.

The new funding is part of a larger financing round, which is likely to include secondary transactions and balloon to over $500 million, people familiar with the matter said. 

The Bengaluru-headquartered startup, which operates an eponymous social commerce platform, is valued at about $3.9 billion in the new funding, the people said, requesting anonymity as the deliberation is still ongoing. The startup, which has raised more than $1.2 billion to date, was valued at $4.9 billion in its previous funding round in September 2021.

WestBridge Capital and Norwest Venture Partners were among investors exploring to purchase stakes in Meesho in recent quarters. WestBridge last year bought Meesho shares from Venture Highway, an early-backer of the Indian startup, TechCrunch first reported. (U.S. investor General Catalyst is separately in talks to acquire Venture Highway, TechCrunch earlier reported.)

Meesho — which counts Meta, Fidelity, Peak XV, Prosus Ventures, B Capital, and SoftBank among its backers — is among the fastest growing e-commerce startups in the country. Its GMV run rate was over $5 billion as of earlier this year, according to Bernstein analysts.

Meesho has successfully captured the attention of value-conscious customers from tier 2+ markets with its attractively priced and diverse unbranded assortment. The startup’s value proposition appears to be resonating well with the low- to mid-income customer cohorts, who form the bulk of India’s consuming class.

With 440,000 annual transacting sellers and over 120 million product listings, Meesho boasts one of the widest assortments across platforms, catering to the complex and heterogeneous preferences of the Indian market, Jefferies wrote in a recent note to its clients.

Traditional e-commerce platforms in India have primarily focused on high-income consumers and branded suppliers, resulting in average order values (AOVs) well over 1,000 Indian rupees ($12). In contrast, Meesho’s AOV is sub-350 Indian rupees.

“Meesho’s algorithm prioritises listings by taking into account multiple factors including seller rating, product rating, customer reviews, customers’ past shopping behaviour, popularity of the product, etc. Hence, pricing also influences the discoverability of a product listing on the marketplace,” Jefferies analysts wrote.

“Meesho’s fulfilment charges are much lower than peers, which allows the platform to offer lower prices to customer vs competition. In order to drive costs lower, Meesho follows an asset-light model and outsources the delivery. Meesho has nearly half the share of India’s annual 3PL e-logistics shipment.”

But the competition is heating up. Amazon India recently launched Bazaar, a “special store” featuring affordable and trendy fashion and lifestyle products. Economic Times first reported about the new funding.