US-based investment firm Fidelity has slashed the valuation of its holding in the Indian social commerce startup Meesho from $4.9 billion to $3.5 billion.
Fidelity's recent assessment in December valued its stake at $27.8 million, down from the $41.9 million invested in the second half of 2022.
What led to the valuation cut?
The valuation adjustment by Fidelity follows a secondary sale transaction where early backer Venture Highway sold some of its equity in Meesho to WestBridge Capital.
“Funds attribute value to their portfolio investments, considering various factors such as the valuation of comparable companies. Based on Fidelity filings, the number of shares held and the current number of total outstanding fully diluted shares, the valuation is assessed at $3.5 billion. The increase in the number of outstanding shares, notably due to the ESOP pool expansion, could have contributed to this valuation shift," a company spokesperson told TechCrunch.
India's fastest growing ecommerce platform
Despite the markdown, Meesho remains a rapidly growing e-commerce startup in India. With Meta, Peak XV, Prosus Ventures, B Capital, and SoftBank among its backers, the company has a current Gross Merchandise Value (GMV) run rate of over $5 billion.
According to the reports, Over 50% of Meesho sales come from Tier 2 and smaller cities, targeting a demographic largely overlooked by major players like Flipkart and Amazon.
Recently, AllianceBernstein report claimed that Meesho overtook giants Amazon and Flipkart in terms of growth rate. The social commerce unicorn witnessed a staggering 32% Year-on-Year (YoY) growth, surpassing both Flipkart and Amazon's 21% and 13% increase, respectively.
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