Gupshup raises $240 mn for share buyback ahead of possible IPO next year

Gupshup on Wednesday said it has raised an additional $240 million in follow-on funding from a group of high-profile investors including Fidelity Management and Research Company LLC, Tiger Global. More than 100 of its employees managed to sell shares to public markets investors in this round.

The Silicon Valley messaging startup, which began its journey in India 15 years ago, surprised many when it raised $100 million in April this year, roughly 10 years after its last financing round, and became a unicorn then.

"This funding round was driven by strong investor interest in Gupshup, given the overall growth in the conversational messaging space and the innovation-led market leadership position Gupshup has established," CEO Beerud Sheth said. "Some of the funds from this round will be used for a share buyback from employees and investors that supported the company for nearly 15 years."

Although venture capital investments are traditionally used for hiring more engineers or expanding sales and marketing, buyback deals allow investors in a startup to realize their investment before an IPO.

"We want to build relationships with these large investors because they can help us in a future IPO and for our growth. But, taking too much money can be dilutive," said Sheth about the buyback, adding that it was necessary.

Additionally, the buyback will allow employees to cash out, a challenge for many startups as delayed IPOs have kept many founders and employees rich only on paper.

Having a focus on India, Gupshup is a conversational messaging platform for companies to manage customer interactions. It provides AI-powered voice bots on messaging apps, allowing customers to transact on these platforms using them, and powers over six million messages a month.

According to Sheth, the company is witnessing a lot of traction from fintech and lending players. It will continue to invest in product innovation for digital commerce enablement and expand its go-to market initiatives in mobile-first economies around the world.

Edited by Rupashree Ravi

Also Read: Gupshup raises $100 million from Tiger Global, enters unicorn club