Meesho IPO: Rs 480 crore from offer proceeds earmarked for AI and tech teams; mirrors global e

Meesho's upcoming IPO reveals a significant Rs 480 crore allocation for its AI, ML, and technology teams, alongside substantial investments in cloud infrastructure and marketing. This strategic spending underscores the company's belief that data and automation are crucial for future e-commerce growth in India, aiming to build a defensible technological moat. . Meesho’s upcoming IPO has thrown up an interesting detail as the company plans to allocate Rs 480 crore from the offer proceeds solely for paying salaries of its AI, machine learning and technology teams. With over 2,000 permanent employees, the sum stands out not just because of its size, but also because it represents one of the largest single allocations for personnel expenses in a recent Indian tech listing. The number raises a question for investors: is Meesho signalling stress around sustaining operations, or simply doubling down on tech talent that it sees as core to its long-term moat? The company argues the latter. The filing shows that the salary allocation sits inside a broader plan to invest heavily in technology infrastructure. Alongside this Rs 480 crore outlay for people, Meesho is putting Rs 1,390 crore into cloud infrastructure through its subsidiary MTPL, and Rs 1,020 crore into marketing and brand building, reported ET. Together, these three buckets make up the sharpest technology-and-growth-focused spend profile among upcoming platform IPOs, reflecting Meesho's conviction that the next phase of e-commerce growth in India will be driven disproportionately by data, automation and personalised discovery. Investor scrutiny over salary spend Still, the optics of using IPO money to pay salaries tend to draw scrutiny. Investors often prefer that fresh capital be spent on assets, product expansion, or customer acquisition — especially for a company that has yet to achieve steady profitability. Meesho posted rising revenues, from Rs 5,730 crore in FY23 to Rs 9,390 crore in FY25, but remains loss-making on a consolidated basis. Its losses widened in Q1 FY26 due to one-time restructuring and ESOP charges. To understand why Meesho is taking this route, analysts said it's important to look at the nature of its business. Meesho runs one of the largest data-heavy consumer marketplaces in India. It handles close to 1.8 billion annual orders, with 214 million transacting users and a seller base of more than 575,000. Its "everyday low prices" model depends on algorithmic pricing, fraud detection, demand forecasting, and logistics optimisation at massive scale. Meesho has built a self-reinforcing flywheel where discovery, content, pricing, and delivery rely on high-velocity machine-learning systems. “Retaining and expanding its AI and engineering teams becomes a non-negotiable part of sustaining growth,” the filing notes. The company says salaries include compensation for existing team members as well as replacements and new hires, especially in ML, AI, and platform engineering. For a marketplace that must operate on low margins and high frequency, even a small efficiency gain in fulfilment, cloud optimisation, or delivery routing can materially shift unit economics.| Global comparisons and strategic alignment Major platform companies — Amazon, Alibaba, Pinduoduo, and MercadoLibre — have all funnelled significant resources into engineering rather than physical assets during their pre-profit phases. These companies treated technology payroll as long-term capital expenditure, arguing that it builds defensible moats that competitors cannot replicate easily. Meesho's filing appears aligned with this approach, particularly given its ambitions to consolidate the value e-commerce segment, which is still underpenetrated in India. For now, the company points to improving operating metrics — rising order frequency, stronger NMV growth, and positive free cash flow in FY24 and FY25 — to argue that the model is stabilising. The management's broader thesis is that India's value-conscious shopper base is expanding, e-commerce penetration in non-electronics categories remains low, and the opportunity for a dominant low-AOV platform is still wide open. Investing in technology talent, in that view, is not an optional spend but a structural necessity, according to the company, as reported by ET.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India) End of Article