ShareChat valuation dips below $2 billion with new funding

Image credits: share chat

Social media startup ShareChat has been valued at less than $2 billion, down from nearly $5 billion in a new funding round, the 9-year-old Indian company with more than 400 million users told TechCrunch. This was a significant drop for emerging companies. South Asian market.

The Bangalore-based startup, which operates a popular social network and short-form video app that supports more than a dozen Indian languages, announced Monday that it has raised $49 million in a transformational round. The company did not disclose the valuation at the time of the funding, but vehemently denied that the new valuation was less than $2 billion, insisting that this round had “no valuation attached.”

Existing investors including Lightspeed, Temasek, Alkeon Capital, Moore Strategic Ventures and HarbourVest are investing in the new round, the company said. The companies’ debt will be converted into equity in the next round at a valuation of less than $2 billion, according to people with direct knowledge of the terms. The officials requested anonymity to speak candidly. TechCrunch reported in December that ShareChat was facing a significant valuation downgrade.

ShareChat backers also include Google, X, Snap, Tiger Global, and Tencent. It has raised approximately $1.75 billion to date.

This price cut comes despite ShareChat having had a very strong year, doubling its revenue while aggressively cutting costs. “When the market turned around, we needed to feel better.” [acquisitions and creator payments] Ankush Sachdeva, co-founder and CEO of ShareChat, said in an interview with TechCrunch:

ShareChat hasn’t spent any money on user acquisition in the past year, and Sachdeva credited improvements to the startup’s content recommendation engine to drive user retention and engagement. The company has also invested heavily in AI talent, particularly in senior roles in its London-based team. ShareChat also announced that it has doubled the ESOP award for each employee within the company as part of a special bonus award.

He said they were also able to reduce the cost of providing content, which is their biggest expense. “When you get content in one of our apps, a lot of calculations are done to find the best 10 content. There is another shipping cost to serve it and consume it. , we were able to reduce combustion,” he said.

Over the past two years, ShareChat has doubled its revenue while reducing monthly cash burn by 90%, attracting major FMCG and gaming companies as advertisers.

Since TikTok was banned in India in 2020, the startup has also continued to focus on India’s short video market despite intense competition from YouTube and Instagram.

“In terms of traffic, our traffic is lower than Instagram and YouTube, but in terms of standalone apps, we are the largest,” Sachdeva said. He believes ShareChat’s unique focus on live streaming as a destination for entertainment and connection between creators and users will differentiate it from its U.S. rivals. The startup acquired local rival MXTakaTak in 2022 in a deal worth more than $700 million.