HSBC Trims ElasticRun’s Valuation To $800 M

SUMMARY

HSBC has pegged ElasticRun at nearly half of the $1.5 Bn valuation at which the startup raised $300 Mn during its last funding round in 2022

ElasticRun’s net loss surged more than 72% to INR 618 Cr in FY23

Founded in 2016, the startup procures products from FMCG companies and sells them directly to local retail stores in rural areas

HSBC has marked down its valuation estimate for B2B ecommerce platform ElasticRun to $800 Mn. 

The Economic Times reported the development citing the brokerage’s research note dated May 21. This cut pegs the SoftBank-backed unicorn at nearly half of the $1.5 Bn valuation at which it raised $300 Mn during its last funding round in 2022. 

This comes at a time when the ecommerce startup continues to incur heavy losses. As per its financial statements for the financial year 2022-23 (FY23), its net loss jumped 72% year-on-year (YoY) to INR 618 Cr, hurt by heavy expenses and employee costs. 

Founded in 2016 by Sandeep Deshmukh, Saurabh Nigam and Shitiz Bansal, ElasticRun procures products from FMCG companies and sells them directly to local retail stores in rural areas. It also offers logistics and warehousing services to these small businesses.

Meanwhile, HSBC also lowered its valuation estimate for ecommerce major Meesho by 14% to $2.5 Bn and agritech startup DeHaat by 11% to $400 Mn.

The development comes at a time when Indian startups are reeling under the impact of funding winter. As a result, the capital has dried up and investors are wary about pumping in capital in big-ticket startups that are yet to show profitability and sustainable growth. 

This is especially true for the ecommerce sector, which saw another major player Udaan raise a down round at $1.8 Bn valuation in January this year, nearly half of the $3.2 Bn at which it was last pegged during its funding round in early-2021. 

In April, another ecommerce platform Meesho was said to be in talks to raise funds at a lower valuation of $3.9 Bn, down 20% from $4.9 Bn from its last known valuation. Other new-age tech startups such as BYJU’S and PharmEasy too have raised capital at lower valuation as funding winter continues to grip the homegrown startup ecosystem. 

In fact, BYJU’S, which was once valued at $22 Bn, raised a $200 Mn rights issue at a post-money valuation of $225 Mn via a rights issue earlier this year. In its note, HSBC also said that investor Prosus’ stake in BYJU’S was worth zero. Even US-based asset management company Baron Capital Group marked down the valuation of the edtech major by a steep 99% at the end of March 2024.

Notably, investors speaking to Inc42 in April said that down rounds and valuation corrections are expected to continue for most of the year, adding that there is some optimism with regards to deal flows returning to ‘normalcy’ in the second half of 2024.

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