Meesho raises $600 million in initial funding round

Bengaluru-based ecommerce platform competing with giants like Amazon India and Flipkart, Meesho has successfully closed the initial tranche of a significant funding round, amounting to $600 million. This round, which includes both existing and new investors, is part of a larger financing endeavor aimed at reaching a total of $3.9 billion in valuation.

The company has been on an upward trajectory since its inception in 2015, having raised a total of $1.36 billion, including secondary transactions. However, Meesho's early investors have been looking to exit, with Venture Highway and others making partial exits last year.

The latest funding round has been in the pipeline since January, with various developments leading to an increase in its size and scope. SoftBank has reportedly shown renewed interest in investing after a period of relative inactivity in India's tech market.

Meesho's strategy also involves reversing its US parent company to facilitate its future plans for an IPO in India. Similar moves have been undertaken by other startups like Groww, indicating a trend of Indian startups bringing their holding companies back to India.

This move, however, comes with significant tax implications, as seen in the case of PhonePe, which had to pay nearly $1 billion to the Indian government for its relocation. Meesho's decision to raise primary capital aligns with its need to account for these potential tax obligations while ensuring operational stability and competitive advantage.

Several other Indian startups, including Pine Labs, Razorpay, Zepto, Eruditus, and Udaan, are also in the process of relocating their holding companies back to India, reflecting a broader trend in the startup ecosystem.