ShareChat’s valuation drops beneath $2 billion in new funding

Social media startup ShareChat’s valuation has cratered beneath $2 billion from practically $5 billion following a brand new funding spherical, a supply accustomed to the scenario advised Information World, marking a steep decline for the nine-year-old Indian startup that boasts over 400 million customers within the South Asian market.

The Bengaluru-based startup, which operates a well-liked social community supporting a dozen Indian languages in addition to a short-form video app, introduced on Monday that it had raised $49 million in a convertible spherical. It didn’t disclose the valuation at which the funds had been raised however strongly denied that its new valuation was beneath $2 billion, asserting there was “no valuation” hooked up to the spherical.

Current traders together with Lightspeed, Temasek, Alkeon Capital, Moore Strategic Ventures and HarbourVest have invested within the new spherical, the startup mentioned. Their debt will convert to fairness at a valuation beneath $2 billion within the subsequent spherical, in accordance with a supply with direct information of the phrases. The supply requested anonymity to talk candidly. Information World reported in December that ShareChat was dealing with a steep valuation reduce.

ShareChat additionally counts Google, X, Snap, Tiger World and Tencent amongst its backers. It has raised about $1.3 billion so far. ShareChat was valued at $4.9 billion in a funding spherical it raised in mid-2022.

The markdown comes regardless of ShareChat experiencing a remarkably constructive 12 months, aggressively chopping bills whereas managing to double its income. “When the market turned, we needed to mood [acquisitions and creator payments] and transfer in the direction of extra worthwhile development,” Ankush Sachdeva, ShareChat’s co-founder and chief govt, advised Information World in an interview.

ShareChat has not spent cash buying customers prior to now 12 months, with Sachdeva crediting enhancements to the startup’s content material advice engine for driving consumer retention and engagement. The corporate has additionally invested closely in AI expertise, notably for senior roles in its London-based crew. ShareChat additionally unveiled that it has doubled the ESOP grant for every worker within the agency as a part of a particular bonus grant.

It has additionally been capable of pare down its single-largest expense, the associated fee to serve content material, he mentioned. “Whenever you fetch content material on one in every of our apps, we do plenty of computation to seek out the ten finest content material. To serve and devour that, there may be one other supply price. Optimizing this has helped us decrease our burn,” he mentioned.

ShareChat has diminished its month-to-month money burn by 90% over the previous two years whereas doubling income, attracting giant FMCG corporations and gaming firms as advertisers.

The startup additionally stays dedicated to the short-video market in India, regardless of sturdy competitors from YouTube and Instagram following the nation’s ban on TikTok in 2020.

“By way of visitors, ours is decrease than these of Instagram and YouTube, however we’re the biggest by way of a standalone app,” mentioned Sachdeva. He believes ShareChat’s distinctive deal with live-streaming as a vacation spot for leisure and creator-user connections will differentiate it from American rivals. The startup acquired native rival MX TakaTak in a deal valued over $700 million in 2022.