ShareChat is in closing phases of deliberations to safe about $50 million in new funding that trims the startup’s valuation to beneath $1.5 billion, based on two sources conversant in the matter.
Present backers together with Temasek and Tencent are among the many buyers in superior phases of talks to put money into the brand new spherical, the sources mentioned, requesting anonymity because the matter is personal. ShareChat has had discussions with a number of potential new buyers this 12 months, however many have balked on the alternative because of ShareChat’s excessive valuation expectations relative to their at the moment low income, based on one of many potential buyers with whom the startup engaged.
The phrases of the talks, that are nonetheless ongoing so they could barely change, at the moment worth ShareChat beneath $1.5 billion, the sources mentioned, a steep drop from the $4.9 billion valuation at which ShareChat raised funding early final 12 months.
A spherical might finalize as early as finish of the 12 months. ShareChat didn’t instantly reply to a request for remark Wednesday morning. Temasek declined to remark, citing its coverage.
The loss-making Bengaluru-headquartered startup — which operates a social community and counts X, Snap and Tiger World amongst its backers — has raised greater than $1.4 billion so far, based on enterprise intelligence platform Tracxn.
ShareChat’s failed wager on the Indian short-video house amid the TikTok ban has compelled a hunt for funds and prompted the markdown. (In late 2020 and early 2021, X explored shopping for ShareChat in a $2 billion deal, TechCrunch completely reported earlier.)
Day by day energetic customers on Google’s Android platform in India, per Sensor Tower’s estimates. In public statements, ShareChat claims it has over 300 million month-to-month energetic customers.
ShareChat, which launched the short-video app Moj in mid-2020, doubled down on the class by buying MX TakaTak, a video app in Instances Web’s portfolio, for over $600 million; nonetheless trade analysts say YouTube and Instagram stuffed the TikTok void as creators migrated to these far bigger platforms.
Eight-year-old ShareChat, whose two co-founders left earlier this 12 months to launch a brand new startup, has been scrambling to search out methods to develop its income and trim bills. It has tried a collection of initiatives, together with a fantasy sports activities app and a stay audio chat service. However on the finish of economic 12 months ending March, its income remained beneath $65 million. It plans to scale back its workforce by one other 15% to twenty% within the coming weeks, based on one other individual conversant in the matter.
Quite a few buyers are writing down the value of their holdings in startups globally amid the protracted slowdown in financial system that has additionally minimize quick the valuations of practically each public tech agency. Prosus just lately marked down the valuation of Byju’s to beneath $3 billion, down from $22 billion in early 2022. Byju’s has raised greater than $5 billion in fairness and through debt through the years.