ShareChat parent in talks to raise $500 mn at $5 bn value

Mohalla Tech, the company that operates social networking services Moj and ShareChat, is in early talks to raise $500 million to $600 million as part of a new fundraise, said two people aware of the discussion.

The startup is expected to raise the funds at a valuation of $5 billion, the people said requesting anonymity. The size of the fundraise can be increased to $650 million amid interest from foreign investors, one of the two people said.

The latest fundraising plans come on the heels of Mohalla Tech raising almost $647 million this year. It raised $145 million in July, adding to its $502 million Series F round led by Singapore state investor Temasek, Moore Strategic Ventures, and Mirae-Naver Asia Growth Fund.

The July fundraise valued Mohalla Tech at $2.88 billion, up from the $2.1 billion valuation it was ascribed in April.

Founded in October 2015, the company has raised close to $1 billion till date over successive funding rounds.

Mohalla Tech’s plans to raise $500 million was first reported by CNBC TV-18 on Monday evening.

“There is increasing investor interest among short-video apps as they continue to get more creators and users from smaller towns and cities, unlocking newer demographics.

“With newer models of video-led social commerce, these companies are also now opening monetization streams. Further, it takes a large amount of capital to scale these models,” the second person said.

Mohalla Tech did not respond to emailed queries from Mint.

In August, Mohalla Tech’s arch-rival, VerSe Innovation, the parent of local language news aggregators Dailyhunt and short-form video app Josh, also raised $450 million from marquee global investors, including Siguler Guff, Baillie Gifford, affiliates of Carlyle and Asia Partners Growth II. With the fundraise, VerSe Innovation was valued at nearly $3 billion.

Mint first reported on 12 October that Mohalla Tech was in talks to acquire Times Internet-owned MX TakaTak.

The short-video category is set to become the second-biggest segment in terms of time spent on them by users, after internet giants such as Facebook and Google, according to consulting firm RedSeer.

Monthly active users of the segment are expected to more than double to 650 million by 2025, securing the second spot after television. The growth will be largely driven by 300 million internet users that are expected to be added by 2025.