Facebook will invest $25 million in a Bengaluru-based social commerce start-up Meesho in a bid to ensure Facebook is also used as a shopping platform while backing the entrepreneurship ecosystem.

“Facebook considers itself an ally of India’s economic growth and social development. One of the areas we are keen to play a role in, is entrepreneurship. In that light, many things in Meesho stand out for us. The Meesho model is a three-way marketplace connecting consumers, resellers and suppliers. What stands out about the model is that they have two million resellers, of which 80 per cent are women who are first time entrepreneurs,” Ajit Mohan, Vice-President and Managing Director, Facebook India, told BusinessLine . While this is Facebook’s first investment in an Indian start-up, it had acquired Hyderabad-based Little Eye Labs for about $10-15 million in 2014. Meesho, however, will remain an independent company with Facebook acquiring only a small stake in the company’s Series D investment round.

According to sources, Facebook was the only investor in this round. Meesho so far has raised $65 million from a number of investors including Sequoia Capital, Saif Partners, Bain Capital, China’s Shunwei Capital, Israeli-Russian billionaire Yuri Milner’s DST Partners and RPS Ventures, a fund set up by former SoftBank managing director Kabir Misra.

Most of the investors continue to be invested in the company. The latest funding takes the total investment in Meesho to $90 million. In its previous round of funding, Meesho had raised $50 million in November 2018.

“Over the last four years we have grown from our humble beginnings at IIT to 15,000 suppliers and 2,000,000 resellers throughout India. 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,” Vidit Aatrey, Co-Founder, Meesho, said.

Facebook already has a social commerce platform called Marketplace where small entrepreneurs and individuals can sell their products to Facebook users. Instagram similarly offers tools for companies to sell products on its platform.

The investment comes at a time when large e-commerce players are struggling to grow their user base in the country. Meesho on the other hand provides an alternative to buyers who may not be actively looking to shop but may end up doing impulse buying as they explore the social media.

“For the next wave of internet users in India, WhatsApp is their starting point and therefore it becomes a natural place to shop. Meesho is filling the gap left out by larger e-commerce players, allowing for impulse shopping while at the same time giving an opportunity to micro-entrepreneurs to build successful businesses,” Mukul Arora, Managing Director at Saif Partners, said.

“Social commerce space is fuelling entrepreneurship and trust in e-commerce across India, specially in tier 2 and 3 towns and this will give a boost to jobs and economy in India. Players like Meesho are at the heart of fuelling this change and creating new sources of income across India,” Arpan Sheth, Senior Partner, Bain Digital and Private Equity Practices.

Facebook however said the company has no plans to give Meesho any exclusive access to Marketplace or any other platform within the group.

“They will be open to sell on any other competing platforms and we will be open to partner with other social commerce platforms,” Mohan said.

“We know many small businesses who have literally started from scratch while leveraging Facebook and Instagram, and grown dramatically in the last few years. We believe that our mission in terms of giving people power to build communities is valid in India,” Mohan said.

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