US-based Fidelity Investments cut the value of its holding in e-commerce unicorn Meesho by nearly 10 percent, effectively valuing the company at $4.4 billion, as per the investment firm’s regulatory filings for the quarter ending March 2023.
In 2021, Fidelity had co-led Meesho's last fundraise — $570 million Series F round — valuing the company at $4.9 billion. The investment firm, which holds about 33,000 shares in Meesho through the Fidelity Central Investment Portfolio Fund, has since reduced the value of its stake by 9.6 percent from $2.59 million to $2.34 million, the filing showed.
With this, Meesho has become the eight homegrown billion-dollar startup to suffer a valuation markdown. Earlier this week, edtech unicorn Eruditus saw investor Private Shares Fund slashing its valuation to $2.9 billion from $3.2 billion.
While we see these valuation drawdowns in a sour economic environment, one must keep in mind: not all of the companies' investors have cut valuations. Mostly the US-based investors have been marking down the value of their holding in India's unicorns, as they re-evaluate the worth of shares in the current market condition. It has no material impact on valuations secured in the previous funding round.
For Meesho, the valuation cut comes at a time when it is striving — like many unicorns — to not only demonstrate growth to support its valuations, but also display a path to profitability. Reducing cash burn has resulted in three rounds of job cuts in the last one year.
Including the 251 employees fired earlier in May, the Vidit Aatrey-led company has issued pink slips to more than 700 employees since last April. The company said it was a difficult decision, but a necessary one, as it looks to turn lean and achieve sustained profitability.
Co-founder and CEO Vidit Aatrey in a letter to employees said, “The macro climate has undeniably and considerably changed.” As a result, the company had to accelerate its timeline to profitability by tempering its growth targets and staying highly prudent, when it comes to costs.
Aatrey even admitted to judgement errors in over-hiring — ahead of the curve— after the company witnessed stellar growth during the pandemic. While Meesho resets its pandemic-era growth targets, investors too are re-assessing their portfolio holdings, as tech valuations tumble the world over.
First Published: May 30, 2023 5:09 PM IST
