Companies
ShareChat to raise up to $50 mn in a bridge round
Summary
- ShareChat is seeking fresh investments that would value the social-media company at $2.2 billion, marking a 55% drop from the valuation it secured last year
MUMBAI : ShareChat, the short-video platform backed by Google Llc, is seeking fresh investments that would value the social-media company at $2.2 billion, marking a 55% drop from the valuation it secured last year, two people aware of the development said.
“The company is looking at a bridge round of around $40-50 million in primary capital," said one of the people mentioned above.
However, a third person close to the founder said it would be a growth equity round as the company is getting closer to breaking even. “The company has brought down the monthly burn from $45 million in 2022 to around $5 million now. The marketing costs are down by 98%. The revenues are now close to meeting the burn."
The company had announced mass lay-offs in January, affecting almost 20% of its workforce. It also shut its gaming division last year and scaled down its social-commerce and live-commerce vertical to contain the burn.
The company’s annualized revenue run rate is around $120 million.
A ShareChat spokesperson declined to comment.
The company has also seen a setback in the growth projections it had for its short-video format Moj, which competes with Josh, YouTube and Instagram in the category. “The growth has not played out the way the company envisaged. Also, the burn continues to be high given the sluggish growth," the first person said.
The company has raised more than $1.43 billion from investors across various funding rounds. ShareChat’s parent company, Mohalla Tech Pvt. Ltd, was last valued at $5 billion in 2022 when it raised $300 million in fresh funding from Google, The Times Group and Temasek Holdings (Pvt.) Ltd. “Some of the company’s investors are looking at marking down the valuation by 55% to around $2.2-2.8 billion," the second of the two people cited earlier said. “Given the market conditions, the valuation markdown is a reality."
Founded in 2015 by Ankush Sachdeva, Bhanu Pratap Singh and Farid Ahsan, the company ventured into short-video format after the ban on TikTok in 2020. It subsequently acquired Times Internet-backed MX Taka Tak in 2021. It spent close to $1 billion in acquisitions, including short-video app Clip; fashion peer-to-peer marketplace Elanic; news and information platform Circle Internet; meme-sharing app Memer; and artists and brands distribution platform HPF Films. Currently, the company has more than 325 million monthly active users (MAUs) across all its platforms.
Last year, two of ShareChat’s co-founders—chief technology officer Bhanu Pratap Singh and chief operating officer Farid Ahsan parted ways with the firm.
According to the first person, some of the early investors in the firm are looking at a secondary stake sale to take some money off the table. “The secondary stake sale talks revolve around a much steeper discount (to the last valuation) though nothing has been finalized."
ShareChat counts Elevation Capital, DST, Tiger Global, HarbourVest Partners, India Quotient, Temasek, Alkeon Capital, Moore Strategic Ventures (MSV), Mirae-Naver Asia Growth Fund, Snap and business tycoons such as Pawan Munjal and Ajay Shridhar Shriram among its investors.
The fresh funding round will likely be raised from the company’s existing investors, including Google and Lightspeed Venture Partners. “The investment could be in the form of CCPS (compulsorily convertible Preference Shares)."
Spokespersons for Google and Lightspeed did not respond to emailed queries.
