ShareChat is in remaining levels of deliberations to safe about $50 million in new funding that trims the startup’s valuation to beneath $1.5 billion, in accordance with two sources conversant in the matter.
Current backers together with Temasek and Tencent are among the many traders in superior levels 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 traders this yr, however many have balked on the alternative because of ShareChat’s excessive valuation expectations relative to their at the moment low income, in accordance with one of many potential traders with whom the startup engaged.
The phrases of the talks, that are nonetheless ongoing so they might 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 yr.
A spherical may finalize as early as finish of the yr. Temasek declined to remark, citing its coverage. ShareChat, which claims to have greater than 350 million customers however fewer than 40 million, per Sensor Tower and Knowledge.ai, mentioned the valuation figures had been “grossly inaccurate.”
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 thus far, in accordance with enterprise intelligence platform Tracxn.
ShareChat’s failed wager on the Indian short-video house amid the TikTok ban has pressured 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 solely reported earlier.)
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; nevertheless business analysts say YouTube and Instagram crammed the TikTok void as creators migrated to these far bigger platforms.
Eight-year-old ShareChat, whose two co-founders left earlier this yr 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 dwell audio chat service. However on the finish of economic yr 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, in accordance with one other individual conversant in the matter.
Quite a few traders are writing down the price of their holdings in startups globally amid the protracted slowdown in financial system that has additionally lower quick the valuations of practically each public tech agency. Prosus not too long ago 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 by way of debt over time.