Social media startup ShareChat’s valuation has fallen from practically $5 billion to $2 billion after a brand new spherical of funding, a supply conversant in the scenario instructed TechCrunch. This marks a pointy decline for the nine-year-old Indian startup that has 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 and a short-form video app, stated on Monday it had raised $49 million in a convertible spherical. It didn’t disclose the valuation at which the cash was raised, however strongly denied that the brand new valuation was lower than $2 billion, claiming there was “no valuation” connected to the spherical.
Current traders, together with Lightspeed, Temasek, Alkeon Capital, Moore Strategic Ventures and HarbourVest, contributed to the brand new spherical, the startup stated. Their debt shall be transformed into fairness within the subsequent spherical at a valuation of lower than $2 billion, in accordance with a supply with direct data of the phrases, who requested anonymity to talk candidly. TechCrunch reported in December that ShareChat suffered a pointy valuation downgrade.
ShareChat additionally counts Google, X, Snap, Tiger International and Tencent amongst its backers. It has raised about $1.3 billion to this point. The corporate was valued at $4.9 billion in a mid-2022 funding spherical.
The value reduce comes regardless of a remarkably optimistic yr for ShareChat, which had aggressively reduce prices and doubled income. “When the market turned, we needed to mood it [acquisitions and creator payments] and transfer towards extra worthwhile progress,” Ankush Sachdeva, co-founder and CEO of ShareChat, instructed TechCrunch in an interview.
ShareChat hasn’t spent any cash on person acquisition up to now yr, Sachdeva stated, attributing enhancements to the startup’s content material suggestion engine to drive person retention and engagement. The corporate has additionally invested closely in AI expertise, notably for senior roles within the London-based staff, and has doubled the ESOP grant for each worker within the firm as a part of a particular bonus grant.
As well as, Sachdeva stated the corporate has been in a position to cut back its largest expense: the price of serving content material. “While you choose up content material in considered one of our apps, we do a whole lot of calculations to seek out the ten greatest content material. To serve and devour it, there are nonetheless supply prices. By optimizing this, we now have been in a position to cut back our combustion,” he stated.
ShareChat has diminished its month-to-month money burn by 90% over the previous two years whereas doubling income, attracting main FMCG and gaming firms as advertisers, its CEO stated. The startup additionally stays dedicated to the brief video market in India regardless of sturdy competitors from YouTube and Instagram following the ban of TikTok within the nation in 2020, he added.
“By way of site visitors, ours is decrease than Instagram and YouTube, however we’re the biggest in relation to a standalone app,” stated Sachdeva. He believes ShareChat’s give attention to livestreaming as an leisure vacation spot and the connections between creator and person will differentiate the corporate from its US rivals. In 2022, the startup acquired native rival MX TakaTak in a deal price greater than $700 million.
