HSBC cuts B2B e-commerce unicorn ElasticRun's valuation to $800 million

HSBC has significantly reduced its valuation estimate for the Pune-based B2B ecommerce startup Elastic Run from $1.5 billion to $800 million.

The reduction pulls Elastic Run below the $1-billion ‘unicorn’ mark. The change reflects broader trends in the valuation of startups, as investors reassess the worth of their portfolios amid challenging market conditions.

Prior to this, HSBC marked Dutch-listed Prosus' nearly 10% stake in Byju's as zero due to a deepening cash crunch and ongoing legal battles.

What does Elastic Run do?

Founded in 2016 by Sandeep Deshmukh, Shitiz Bansal, and Saurabh Nigam, Elastic Run works with FMCG brands to extend their reach in rural markets. The startup sources products from FMCG companies and sells them to local retail stores in rural areas. 

In addition to its core business, It provides logistics and warehousing services and offers lending services through its logistics network across the country.

Surge in losses

Elastic Run's financial performance has been under pressure, contributing to the lowered valuation.

The startup's net loss increased by 72% in FY23, reaching Rs 618 crore due to high expenses and employee costs. These financial challenges have made it difficult for Elastic Run to maintain its previous valuation levels.

What other valuations did HSBC adjust?

HSBC’s research note dated May 21 also included revised valuation estimates for other Indian startups. The valuation estimate for etailer Meesho was reduced by 14% to $2.5 billion, and that of agritech firm Dehaat was lowered by 11% to $400 million.

However, Meesho is currently in the midst of a $600-million funding round, which could close at a valuation of up to $4 billion. These periodic reviews are conducted by top brokerages and reflect the current market sentiment and financial health of these companies.