Facebook India has announced its first investment in an Indian start-up. The social media major has taken a minority stake in Meesho, one of the fastest growing e-commerce start-ups in the country.
Founded in 2015 by IIT-Delhi graduates Aatrey and Sanjeev Barnwal, the Bengaluru-based firm operates as an online marketplace that connects resellers directly with raw material suppliers using social media services such as WhatsApp and Facebook and also connects individual sellers and small businesses with customers. A majority of the resellers are homemakers, small business owners, small boutique brands and those who sell art and craft, fashion wear, home and kitchen products.
CNBC-TV18’s Syna Dehnugara caught up with Facebook India Vice President and Managing Director Ajit Mohan to know what made the company bet money on the start-up platform.
Here are the edited excerpts from the conversation.
Meesho has a large reseller network that largely uses Facebook, WhatsApp, Instagram and other social platforms to enable commerce. So the firm seems perfect for an investment. How did you select this company?
Meesho is a three-way market place that connects suppliers, resellers and the part about it that really caught our attention was not just the explosive growth that they have had in the last couple of years, but that growth has been largely centered on tier-II and tier-III cities. They have two million resellers and the number has grown dramatically in the last year. More than 80 percent are women. So the Meesho social commerce model is fuelling entrepreneurship as well as it is fuelling women entrepreneurs.
So I think that was the primary reason for choosing Meesho. A lot of the work that we do every day is to help small businesses discover new markets, but here there is an opportunity to have an impact and really be an ally for India.
Can you give me a sense of the size of the deal, what kind of investment has gone into Meesho?
We are not disclosing the size of the financial investment. It is a minority stake, an equity investment, but it is also opening the door to engaging with Meesho to see how we can be supportive over the next few months and years.
What is the volume of business that Meesho is transacting on various Facebook platforms? How do you think your investment now in the company will strategically deepen that further? Are there targets that you are looking at, can you give us a ballpark figure?
We didn’t look at what they are transacting on our platforms. The real reason is it is an opportunity to fuel the India internet story where two entrepreneurs have created this exciting model that is taking commerce to the smaller cities and lighting up female entrepreneurship. So the lens was impact of that kind, the lens was not transactional in nature. We have no assumption that making an investment in Meesho will anyway change the commercial relationship.
Since you have a minority stake in the venture now, what kind of strategic inputs will come from Facebook to help that business?
I think two things. Firstly, Meesho is already a very successful company. We are glad to partner with them. Secondly, I think we will look for guidance from the Meesho founders in terms of support they want from us that can help fuel this entrepreneurship model and we will see if there are opportunities for us to do things together.
I want to also clarify that some of the answers that we discover while we work with Meesho will be available to other partners as well. So we are not looking at this as closing of opportunities for either Meesho to work with other companies and platforms or for us to work with companies like them independent of the category they are in.
I think the idea is there was an opportunity to fuel the model through a financial investment.
Did you look at other social commerce companies? There are a bunch of them apart from Meesho and what really stood out about Meesho vis-à-vis the others?
Without going into the evaluation process, I would be happy to talk about what excited us about Meesho. First, we thought the two founders had the right framework in terms of business building. They were bringing a lot of passion and problem-solving and testing and learning approaches that we as a company like.
Second, we like the fact that the impact was in tier-II and tier-III cities. Third, we can be even more of an ally for India, we can fuel the India internet story and even more, the kind of impact that they are having in lighting up female entrepreneurship.
There was a lot of buzz that the first investment would come into the content start-ups and there were reports that your team was speaking to a whole bunch of these companies whether they were in vernacular or local language content space or larger publishers’ platforms that focus on content. So a bit of a surprise that it is in social commerce and not social content. Is that an area that you are looking at actively?
I think the lens to the investment was fuelling a model that has serious impact and can transform lives. For me, two million resellers and more than 80 percent of whom are women in a very short period of time indicates the kind of impact that Meesho can have in India for job creation. So that lens was exciting. I think we will be open to opportunities across the board where there is similar impact. On the content front, the only point to make is that we have a lot of partners, large media companies, small media companies, creators, celebrities who work with us every day. So that agenda continues. We work closely with them and we are hopefully finding new ways to add value to them every day.
Even if you look at it globally, Facebook has largely acquired start-ups. There have been about 70-plus acquisitions in the life of Facebook, and the two biggest ones are WhatsApp and Instagram. How is the investment theme now and is the focus going to be largely on India and Asia-Pacific?
I think some of these answers are evolving. Predominantly the focus has been on acquisitions globally. The question in India is how we can be even more of an ally and in that context we have expanded the canvas a bit to say where there are opportunities to fuel companies like Meesho with financial investments. I do not think we are creating an India fund. The predominant lens is if there are opportunities to fuel India where we can be an ally in that growth.
You said that you are not looking at setting up a separate fund on the lines of what some of the large other Silicon Valley giants have, the Google ventures of the world and so on, and that is as of now. But over a period of time what shape, structure would this take? Is there a separate team that is looking at investments or is it largely just going to be opportunistic? Who is going to lead these efforts here?
The lens for me is very strategic. We are looking at parts of the internet ecosystem that we can fuel. What are the companies that are showing promise of impact like Meesho is doing on female entrepreneurship. It’s a strategic lens that we are applying, but there are people who work, who evaluate these opportunities but it is really looking at a framework of impact in India.
You have a whole bunch of start-up programmes that you have been running in India. CNBC-TV18 has also partnered with a few of them over the years and I think over the last few years, you have had over 400-500 start-ups that have been impacted through these programmes. Mostly focused on the social good side or women entrepreneurship or augmented reality. Are you looking at upscaling these a little bit, are you applying this investment lens to some of these programmes?
I look at it with a separate lens. There is work that we do every day in aiding small businesses. There is work in terms of helping new ventures. We are excited about the agenda of how can we further the agenda of improving access for women to the internet in India. So those programmes continue, but I would look at the investment lens that we are applying to Meesho separately. We are not going to use those programmes as feeder to the investments that we may make because those programmes exist on their own merit and we feel we can create a lot of impact there anyway. I would not go and mix the two up at the moment.
Going forward, can we expect more announcements? What is the sort of trajectory that this investment model might take in India over the next 8-9 months, what can we expect?
We will be thoughtful. We will be strategic but where there are opportunities to fuel and invest in businesses that can create massive impact in India, that is good for India, that is good for the India internet, we will explore those opportunities. We will look to work with ventures that see Facebook as an ally and where they see there is an opportunity for us to support them constructively.
What are some of the verticals that you would look at? Social commerce could be one, local language content and platforms could be another, what are the other sectors that you are looking at?
We didn’t start with the lens of categories. We looked for interesting models that are emerging, that are innovative, some of them unique for India and they are scaling, they are solving for the new India that is showing up on the internet and they are creating massive impact. The minute you apply that lens, it does become category agnostic, it can happen in any category and I think where there is alignment with the Facebook mission of giving people the power to build communities, those become particularly exciting for us.
You are looking to help the Meesho team chart a route out of India as well?
We haven’t spoken specifically about that. I think it is a fabulous team, they have done a fabulous job. I think where they pull us into conversations where they believe we can add value, we will engage deeply and positively.