Meesho secures $275 million in funding, eyes further capital infusion
Meesho, an Indian e-commerce start-up, has successfully secured funding of $275 million from its existing investors, as per regulatory filings with the Securities and Exchange Commission (SEC). The investor list includes notable names such as SoftBank, Elevation Capital, Prosus, and Peak XV Partners. This capital infusion is part of a larger ongoing funding round at the company.
Considerations to increase funding round size
Initially, Meesho aimed to raise $300 million. However, due to heightened investor interest, the company is now contemplating increasing the round size to between $500-650 million. The final amount is yet to be determined as discussions are still underway. This funding round comprises a mix of debt and equity, marking Tiger Global's return as an investor in Meesho after a break.
Funding to offset tax liabilities, valuation decreases
From the total amount raised, approximately $300 million of primary capital will be utilized to pay off taxes, incurred from relocating the company's base back to India from Delaware ahead of an Indian IPO. Despite this successful funding round, Meesho's valuation has seen a decrease. The current round values the company at $3.9 billion, which is 20% lower than its previous valuation of $4.9 billion in 2021.
Financial performance and future prospects
Meesho broke even in Q3 FY24, after recording a profit of $5 million in Q2 FY24, as revealed through an internal set of documents shared with existing and potential investors. The dip in profit was attributed to higher operational costs and Employee Stock Option (ESOP) spending during this period. Consequently, Meesho did not maintain a streak of profitability that began in Q2 FY24.
