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ShareChat May Raise $100 Mn From Twitter, Hillhouse Capital

ShareChat May Raise $100 Mn From Twitter, Hillhouse Capital

The deal may increase ShareChat valuation to $600 Mn - $650 Mn

Existing investors may also participate in the deal

Twitter may invest more than $50 Mn as part of this deal

Indian regional language social platform ShareChat may raise $100 Mn at $600 Mn – $650 Mn valuation. Reportedly, the investment is likely to come from new investors, the microblogging site Twitter and Hong Kong-based investment management firm Hillhouse Capital, with backing from existing investors including  Xiaomi, Shunwei Capital and Morningside Venture Capital.

The media report cites people familiar with the development, suggesting that Twitter may invest more than $50 Mn as part of this deal against a minority stake in ShareChat.

The Bengaluru-based startup has been scouting for funds since it last raised close to $100 Mn (INR 720 Cr) in September 2018 at a valuation of $460 Mn (INR 3,332 Cr), a 7x increase from the last valuation of $67 Mn. The company was also said to be in early talks with Tencent Holdings Ltd and other investors to raise as much as $200 Mn. Till date, the company has raised $122 Mn.

Founded by IIT-Kanpur alumni, Farid Ahsan, Bhanu Singh and Ankush Sachdeva, in October 2015, ShareChat allows users to create, discover, and share content with each other. It also has features like anonymous chat, direct messaging, original video content under the banner of ShareChat Talkies. It was also a part of the 2018 edition of the most coveted list of India’s most innovative startups — 42Next by Inc42.

The company is currently facing tough competition from Chinese social media company ByteDance’s apps, TikTok and Helo. Currently, 39% of TikTok’s 500 Mn global users are from India, mostly between the ages of 16 to 24 years. Another Chinese app, Like, which was the third-most downloaded app in India in 2018, counts 64% of its users as Indian.

An email sent to ShareChat did not elicit any response till the time of publication.

Why Investment In ShareChat Makes Sense For Twitter?

Twitter observed a 14% decline in its revenues for the fiscal year ending March 2018 and has appointed Manish Maheshwari to lead its Indian operations in April 2019. As he said in an earlier media statement, “With premium Indian content on the rise in multiple regions across the country, I believe we are scratching the surface of what’s possible with Twitter in India.”

A November 2018 Business World report suggested that vernacular user base in India may reach 540 Mn by 2021. Thus, the investment may help Twitter to further expand its market share in India, beyond the metro cities.

Accessible in 14 regional languages, ShareChat’s strength has been its popularity in Tier 2 and Tier 3 cities. The company has seen daily active users increase from 5 Mn in April-May, 2018 to over 8 Mn by the end of 2018.

It has also recently acquired Transversal Tech-owned video sharing app Clip. ShareChat will integrate the Clip app into its product as it looks to grow and strengthen its presence in the deeper competitive market.

Such investments in startups could be the first try for the microblogging site as the company usually buys out the companies it is interested in. So far, Twitter has acquired only one Indian company, the Bengaluru-based Zipdial in 2015 for a speculated amount of $40 Mn – $50 Mn.