Google-Backed ShareChat Eye $50 Mn Funding, Might Face 55% Valuation Drop

ShareChat Bags $16 Mn Debt Funding From EDBI, Round Size Increases To $65 Mn

SUMMARY

The social media unicorn might face a 55% valuation markdown, taking its valuation to $2.2 Bn - $2.8 Bn

The short video unicorn has raised more than $1.43 Bn from investors thus far

Its losses escalated to INR 2,988.6 Cr in FY22, up from INR 1,460.9 Cr in the FY21

Google-backed short video platform ShareChat is looking to raise $50 Mn in a fresh funding round.

However, the social media unicorn might face a 55% valuation markdown taking its valuation to $2.2 Bn – $2.8 Bn, according to a Mint report.

The fresh funding round will likely be raised from the company’s existing investors and would most likely be in the form of CCPS (compulsorily convertible preference shares).

Several early investors are considering a secondary stake sale to realise profits, which might lead to a more significant decrease in valuation, the report added.

The short video unicorn has raised more than $1.43 Bn from investors thus far. It counts Google, Temasek, Times Group and others among its investors.

ShareChat saw its total revenue soar to INR 419.2 Cr in the fiscal year 2021-22 (FY22), marking a 4.3X increase from INR 80.4 Cr in FY21, primarily driven by a significant rise in its operating revenue. However, its losses escalated to INR 2,988.6 Cr in FY22, up from INR 1,460.9 Cr in the previous fiscal year.

ShareChat has had a rough few quarters in the recent past. To make a push for profitability, the startup conducted massive layoffs and shut down multiple business verticals.

In January, ShareChat and Moj’s parent company Mohalla Tech fired 500 employees in a bid to cut costs and restructure the business. Following the retrenchments, it also shut its gaming division, Jeet11 and scaled down its social commerce, live commerce and fact-checking vertical to contain the burn.

Amid all the goings-on at the unicorn, two of its cofounders – CTO Bhanu Pratap Singh and COO Farid Ahsan moved away from active duty.

Founded in 2015 by Singh, Ahsan and Ankush Sachdeva, ShareChat ventured into short video format after the ban on TikTok in 2020. Currently, the startup claims to have more than 325 Mn monthly active users (MAUs) across all its platforms.