Angel investors and early institutional shareholders in the ecommerce company Meesho are currently in discussions with investors to divest their stake, according to sources familiar with the matter. Talks are underway for a transaction at a valuation ranging from $3 billion to $3.5 billion, although this figure is subject to change, as per the sources.
Entities such as WestBridge Capital and Norwest Venture Partners have reportedly engaged in discussions with Meesho’s early investors, reflecting the growing trend of secondary share sales in late-stage firms. New investors are showing interest in assets that have weathered the funding challenges and reduced operating burn over the past year.
Meesho’s early investor, Venture Highway, had previously sold a portion of its stake in the company to WestBridge Capital in October, retaining 1% in the SoftBank and Meta-backed startup, which was last valued at nearly $5 billion in 2021. Sources indicated that WestBridge Capital has expressed interest in acquiring more shares in Meesho, and Norwest has also been involved in discussions. The focus of these conversations revolves around the pricing of the deal, as older investors seek to exit their positions.
It is worth noting that secondary transactions typically occur at a discount to the last primary valuation, which could impact the timing of the company’s next primary capital raise. A spokesperson for Meesho declined to comment on the matter, citing company policy. Queries sent to Norwest Venture Partners and WestBridge Capital did not receive a response.
Sources revealed that other investors have also shown interest in Meesho, although their identities were not immediately available. Venture Highway reportedly plans to sell its remaining 1% stake in Meesho during this round.
Meesho announced on December 29 that its loss for the fiscal year ended March 31 had decreased by 48% to Rs 1,675 crore, while its operating revenue had grown by 77% to Rs 5,735 crore. In the first half of FY24, the online marketplace reported a 37% year-on-year increase in operating revenue to Rs 3,521 crore, with a 90% reduction in loss to Rs 141 crore. The company stated that it had achieved profitability for the September quarter but did not disclose specific figures. Meesho’s CEO, Vidit Aatrey, had previously mentioned that the company had recorded its first after-tax profit in July.
Against the backdrop of a funding slowdown, several large startups have facilitated investor exits through secondary investments, while also attracting new investors ahead of potential initial public offerings (IPOs) in the coming years. In 2023, India witnessed a seven-year low in primary funding for startups at approximately $8.8 billion. However, investors and founders anticipate a continuation of secondary funding deals in 2024.
