India’s burgeoning digital start-up landscape, already one of the largest markets in the world for technology and social media companies, has begun attracting the big fish. The world’s largest social media platforms have all made significant investments in the Indian start-up ecosystem in recent times, with Facebook’s undisclosed investment in social commerce startup Meesho last week only the most recent.
According to industry insiders, the social media giant’s motivations for its first investment in an Indian start-up for a minority stake (it had made its first acquisition in 2014) has several facets. For one thing, Facebook has been trying to rapidly monetise its services, and Meesho has built a large network of buyers and sellers using platforms like Facebook, Whatsapp and Instagram, the latter two of which are also owned by Facebook. “This is a shoo-in as far as what Facebook, and its competitors, are shopping for in India. The country is perhaps the largest market for its platforms and monetising them is the logical next step,” said a senior industry analyst.
This overlap in markets provides unique synergies that both firms can exploit, experts add. “We share a common goal with Facebook—to enable community and help small businesses grow. This commitment from Facebook will help us leapfrog towards our goal,” Meesho co-founder and CEO Vidit Aatrey said in a statement. Another factor making Meesho an attractive option is the demographic spread of its clientele, with housewives and students the largest sub-groups.
While neither Facebook nor Meesho have divulged any financial details, sources say the former’s investment is a “substantial” one for the start-up valued $250 million. Meesho had raised around $65 million via several funding rounds before the deal with Facebook was announced.
However, Facebook is not the first of the social media giants to have established investments in India’s startup sector, especially in firms who offer services intricately connected with their own platforms and products.
Google, for instance, made its first investment in an Indian start-up as early as 2017, when it signed on as an investor with hyperlocal logistics start-up Dunzo. Founded in 2015, the Bengaluru-based company has so far raised $30.3 million across eight rounds of funding, and delivers a various assortment of goods and services to its clients, right from picking up and dropping medicines, flowers, laundry, books or even pet supplies. Twitter, for its part, is reportedly in talks to invest a whopping $50 million or more in regional language social media platform Sharechat, which may be on track to raise upwards of $100 million in a soon-to-be launched funding round.
“If you examine these deals closely, in ties in well with the strengths of these giant social media firms. For example, offering hyperlocal concierge services to those who search on the Google platform is one of the potentially lucrative monetisable solutions for company. Ditto for Facebook and Twitter,” said an industry analyst.
Social media Big 3 shopping for desi cos
The world’s three largest companies in the social media segment have all begun looking for investment opportunities in the Indian region. While Facebook had made its first acquisition as early as 2014, its investment in Meesho is its first for a minority stake in an Indian start-up.
According to statements, while the quantum of its investment has not been disclosed, Facebook believes Meesho’s network of offerings, which facilitate connections between buyers and sellers on Facebook-owned Whatsapp and Instagram, will help it monetise the platforms where Indians are already one of the largest user demographics
Facebook competitor Google too had made a similar investment two years ago when it infused around $12 million into hyperlocal delivery and concierge startup Dunzo, which is also seen as a way to monetise Google’s business strength, especially its search engine business. Dunzo’s hyperlocal services would add value to Google’s search engine and social media services, according to experts
Twitter is not to be left behind, either, if reports are to be believed. Sources say the social media giant is in talks with regional language social media platform Sharechat, where it is likely to invest upwards of $50 million