Gupshup: Fidelity halves Gupshup’s valuation to roughly $697 million

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A fund run by financial services giant Fidelity Investments has now halved the valuation of conversational messaging software provider Gupshup from its initial investment, according to a regulatory disclosure as of June 30, 2023.

The updated value of its holding now pegs Gupshup’s valuation at $697 million, suggesting a steep markdown for the homegrown software startup. It was valued at $1.4 billion when Fidelity first invested in the company.

Fidelity Blue Chip Growth Fund’s stake in the San Francisco-headquartered startup was valued at nearly $11.09 million as of April 30, 2023, which it successively marked down to $10.16 million by May 31 and to $8.08 million in June 30, this year.

The fund’s latest markdown represents an over 20% cut in the estimated worth of its holding in Gupshup, between May and June.

In June 2021, the fund had acquired 709,497 preference shares of the company for $16.2 million.

Online publication TechCrunch was the first to report about Gupshup’s markdown by Fidelity on Monday morning.

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The 2004-founded startup, which helps businesses with conversational tools such as chatbots, had raised an additional $240 million in follow-on funding from investors, back in July 2021, which saw participation from Fidelity Management and Research Company. The round was largely secondary to give exits to employees and early investors before its planned US listing. In a secondary round, the funding doesn’t go into the company’s coffers, but to investors selling their shares and taking an exit.

Other investors backing the company as a part of the follow-on round included Tiger Global, Think Investments, Malabar Investments and Harbor Spring Capital.

The follow-on round was succeeding a $100 million raise from Tiger Global in April 2021, at a $1.4 billion valuation.

To be sure, the fair value of an asset fluctuates over time with changes in open market, macroeconomic conditions as well as valuation methodologies, with funds regularly doling out these updates based on their internal policies.

Other late-stage startups that have had their valuations revised by institutional investors in recent months include edtech major Byju’s, social commerce platform Meesho, payments services provider Pine Labs, online pharmacy PharmEasy, mobility company Ola, and food delivery company Swiggy.

As market conditions weaken and macroeconomic headwinds persist, several new-age technology startups, both domestically and globally, have deferred their listing plans.

Even Gupshup, which was aiming for a public listing by the end of 2022, has deferred its plans until markets correct, and is also in talks to shore up a pre-IPO funding.

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