Naspers leads USD 125 million bet on Meesho amid India’s second e-commerce tide

The Cape Town-based investor cashed out on Flipkart, and now bets on a new crop of e-commerce startups.

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India’s e-commerce market might have been divided and grabbed by the duopoly of Amazon and Flipkart, but that’s not discouraging a slew of vertical players from surging in what the local internet industry characterized as the second-tide of e-commerce startups.

Meesho, a social e-commerce startup, said Monday that it raised a USD 125 million Series D led by Naspers with participation from existing investors including SAIF, Sequoia, Shunwei Capital, and Venture Highway among others.

This is the single largest financing round for the four-year-old startup that takes its total funding to date to 215 million dollars. The deal was also expected, according to people familiar with the deal as quoted by local news outlet ET, to push Meesho’s valuation to between USD 600 and 650 million.

Meesho is using the new funding, in addition to scaling up its technology, to extend its tentacles into the country’s small towns.

Naspers last year cashed out of Flipkart for USD 2.2 billion by selling 12% stake in the company to Walmart. After the fruitful exit from Flipkart, which is the poster child of India’s first generation of e-commerce startups, the South African investor is now betting on the country’s next crop of e-commerce companies.

Meesho connects sellers and buyers through social media platforms such as Facebook, WhatsApp, and Instagram. It claims to have built out a network of over 2 million sellers, consisting of mostly small retailers, women, students, and retirees, across 700 towns in India. Vidit Aatrey, the startup’s co-founder and CEO, believes that Meesho “is the future of online shopping for the next 500 million consumers.”

We wrote before that, as India’s metropolitan e-commerce market plateaus, the next front of growth is coming from its lower-tier cities and towns, where millions of new buyers are “starting their e-commerce journeys every month.”

Snapdeal, recently raised an undisclosed amount of personal investment from Anand Piramal, executive director of Piramal Group, an Indian conglomerate, also zero in on India’s small-town e-commerce scene after its resurgence.

The Meesho app is already available in more than seven local languages other than English since 40% of its daily usage comes from non-English speaking users.

Meesho is part of India’s second e-commerce tide after Amazon and Flipkart, this time being fuelled by small-town and vernacular users. It is rather difficult for companies such as Amazon and Flipkart to get into this niche area, which is why investors are taking bets on social commerce startups.

Some of the company’s key rivals are Shop101, GlowRoad, Ezmall, and Woopl. Mumbai-based Shop101 had raised USD 11 million from Kalaari Capital and Unilever Ventures in December 2018, and Bangalore-based GlowRoad raised USD 10 million in April 2019 from China’s CDH along with existing investor Accel Partners.