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

Social media startup ShareChat’s valuation has cratered under $2 billion from almost $5 billion following a brand new funding spherical, a supply aware of the scenario instructed TechCrunch, 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 under $2 billion, asserting there was “no valuation” connected to the spherical.

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

ShareChat additionally counts Google, X, Snap, Tiger International and Tencent amongst its backers. It has raised about $1.3 billion to this point. 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 yr, aggressively reducing bills whereas managing to double its income. “When the market turned, we had to temper [acquisitions and creator payments] and move towards more profitable growth,” Ankush Sachdeva, ShareChat’s co-founder and chief govt, instructed TechCrunch in an interview.

ShareChat has not spent cash buying customers previously yr, 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, significantly for senior roles in its London-based workforce. 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 in a position to pare down its single-largest expense, the fee to serve content material, he stated. “When you fetch content on one of our apps, we do a lot of computation to find the 10 best content. To serve and consume that, there is another delivery cost. Optimizing this has helped us lower our burn,” he stated.

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

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

“In terms of traffic, ours is lower than those of Instagram and YouTube, but we are the largest in terms of a standalone app,” stated 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 local rival MX TakaTak in a deal valued over $700 million in 2022.