ShareChat is in the final stages of negotiations to secure about $50 million in new funding that brings the startup’s valuation below $1.5 billion, according to two sources familiar with the matter.
Existing backers including Temasek and Tencent are among investors in advanced talks to invest in the new round, the sources said, requesting anonymity as the matter is private. ShareChat has had discussions with several potential new investors this year, but many have shied away from the opportunity due to the startup’s high valuation expectations against currently low revenue, according to one of the potential investors the startup has worked with.
The terms of the talks, which are still ongoing and could change slightly, currently value ShareChat at less than $1.5 billion, the sources said, a steep drop from the $4.9 billion valuation at which ShareChat raised funding early last year.
A round could be completed as early as the end of the year. ShareChat, which claims to have more than 400 million users but fewer than 40 million, per Sensor Tower, said the valuation figures were “grossly inaccurate.” Temasek declined to comment, citing its policy.
The loss-making Bengaluru-based startup — which operates a social network and includes X, Snap and Tiger Global among its backers — has raised more than $1.4 billion to date, according to business intelligence platform Tracxn.
ShareChat’s failed bet in the Indian short-form video space amid the TikTok ban forced a hunt for capital and led to the decline. (In late 2020 and early 2021, X explored buying ShareChat in a $2 billion deal, TechCrunch exclusively reported earlier.)
Daily active users on Google’s Android platform in India, as per Sensor Tower estimates (shared with TC by an industry executive).
ShareChat, which launched short video app Moj in mid-2020, doubled down on the category by acquiring MX TakaTak, a video app from the Times Internet portfolio, for over $600 million. However, industry analysts say YouTube and Instagram have filled TikTok’s void as creators have moved to these much larger platforms.
Eight-year-old ShareChat, whose two co-founders left earlier this year to start a new startup, is trying to find ways to increase revenue and cut expenses. It has attempted a number of initiatives, including a fantasy sports app and a live audio chat service. But in the fiscal year that ended in March, its revenue remained lower 65 million dollars. It plans to cut its workforce by another 15% to 20%, or 200-300 people, in the coming weeks, according to another person familiar with the matter. This would be the startup’s third layoff in a year.
Many investors are recording the value of their holdings in startups worldwide amid a prolonged economic slowdown that has also cut the valuations of nearly every public technology company. Prosus recently cut Byju’s valuation below $3 billion, down from $22 billion in early 2022. Byju’s has raised more than $5 billion in equity and debt over the years.
