Fidelity Investments, a US-based investment firm, has recently slashed the valuation of Indian e-commerce unicorn Meesho by approximately 10 percent. The regulatory filings for the quarter ending in March 2023 indicate that Fidelity now values Meesho at $4.4 billion, down from the previous valuation of $4.9 billion.
This markdown aligns Meesho with other homegrown billion-dollar startups that have experienced similar valuation reductions. While US-based investors have predominantly adjusted the worth of their investments in Indian unicorns, these markdowns do not significantly impact valuations secured in previous funding rounds.
Valuation Markdown and Fidelity’s Stake:
Fidelity co-led a $570 million investment after taking part in Meesho’s Series F fundraising round in 2021, giving the business a $4.9 billion valuation. Fidelity’s investment is now worth $2.34 million instead of $2.59 million, a 9.6% decrease. The documents show that through the Fidelity Central Investment Portfolio Fund, Fidelity has about 33,000 shares in Meesho.
Meesho Amongst Other Homegrown Unicorns:
Meesho’s markdown joins the ranks of homegrown unicorns facing similar valuation adjustments. Recently, edtech unicorn Eruditus witnessed its valuation being reduced from $3.2 billion to $2.9 billion by investor Private Shares Fund. These markdowns primarily occur in the current economic climate, where US-based investors are reevaluating the worth of their shares in Indian unicorns. Importantly, the markdowns do not materially impact the valuations obtained during previous funding rounds.
Meesho’s Path to Profitability:
The valuation cut arrives at a critical juncture for Meesho, as the company aims to showcase growth and profitability. Like many unicorns, Meesho has been working towards achieving sustained profitability while minimizing cash burn. This focus on cost reduction has resulted in three rounds of job cuts within the past year. In May alone, the company let go of 251 employees, bringing the total number of layoffs to over 700 since April of the previous year. These decisions were difficult but necessary as Meesho strives to streamline operations and ensure long-term profitability.
CEO’s Perspective and Investor Reassessment:
Meesho’s co-founder and CEO, Vidit Aatrey, acknowledged the changing macroeconomic climate and the need to adapt swiftly. In a letter to employees, Aatrey highlighted the company’s decision to accelerate its path to profitability by adjusting growth targets and adopting a cautious approach to costs.
He also acknowledged misjudgments in over-hiring, which occurred during the company’s remarkable growth phase amid the pandemic. As Meesho readjusts its growth targets to reflect the post-pandemic era, investors worldwide are also reevaluating their tech-focused portfolios in response to declining valuations.
In conclusion, Fidelity Investments has revised Meesho’s valuation, reflecting the current trend of homegrown unicorns experiencing markdowns. Meesho, alongside other Indian startups, is focused on achieving sustained profitability through cost reduction measures. The company’s CEO has acknowledged the need for adaptability in the changing economic landscape, as investors reassess their portfolios in light of declining tech valuations worldwide.
Meesho is the biggest and most reliable online marketplace in India for resellers who sell products through WhatsApp and Facebook.
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