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ShareChat’s valuation falls below US$2 billion in new round of financing

Social media startup ShareChat’s valuation has fallen below $2 billion from nearly $5 billion in a new round of funding, a source familiar with the matter told TechCrunch, marking a milestone for the nine-year-old company with more than 400 million users in India. Valuations of Indian startups have fallen sharply. South Asian market.

The Bengaluru-based startup, which operates a popular social network in a dozen Indian languages ​​as well as a short-form video app, announced on Monday that it had raised $49 million in a convertible funding round. It did not disclose the valuation at which it raised the money, but strongly denied its new valuation was less than $2 billion and insisted there was “no valuation” in the round.

The startup said existing investors including Lightspeed, Temasek, Alkeon Capital, Moore Strategy Ventures and HarbourVest have invested in the new funding round. Their debt will be converted into equity in the next round at a valuation of less than $2 billion, according to sources with direct knowledge of the terms. The source requested anonymity in order to speak candidly. TechCrunch reported in December that ShareChat was facing a significant valuation cut.

Supporters of ShareChat also include Google, X, Snap, Tiger Global and Tencent. It has raised about $1.75 billion to date. ShareChat was valued at $4.9 billion in a funding round it raised in mid-2022.

The price cut comes despite ShareChat having had a very positive year, aggressively cutting expenses while managing to double revenue. “When the market turns, we have to calm down [acquisitions and creator payments] ShareChat co-founder and CEO Ankush Sachdeva said in an interview with TechCrunch:

ShareChat has not spent money on user acquisition in the past year, and Sachdeva credits improvements to the startup’s content recommendation engine for improving user retention and engagement. The company is also investing heavily in AI talent, particularly in senior roles within its London team. ShareChat also revealed that it has doubled the ESOP grant for each employee of the company as part of a special bonus grant.

It will also be able to cut the largest single expense, the cost of content services, he said. “When you get content on one of our apps, we do a lot of calculations to find the 10 best pieces of content. In order to serve it and consume it, there are additional shipping costs. Optimizing this helps us reduce consumption,” He said.

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

Despite fierce competition from YouTube and Instagram after India banned TikTok in 2020, the startup remains committed to India’s short video market.

“In terms of traffic, we are 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 creators to connect with users will differentiate it from its U.S. rivals. The startup acquired local rival MX TakaTak in 2022 in a deal worth more than $700 million.

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