Monday, July 15, 2024

ShareChat Raises $49 Million Debt Funding from Existing Investors

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Google-backed Mohalla Tech, the parent company of vernacular social media platform ShareChat and short video app Moj, has successfully secured $49 million in debt funding from its existing investors. This move comes as the company aims to bolster its financial position amidst ongoing challenges in the market.

The company’s board has passed a resolution to issue 4,895 Series I debentures, each priced at $10,000, to raise the targeted $49 million for the ShareChat debt funding. Notable existing investors participating in this debt round include Temasek, Lightspeed, HarbourVest, Moore Strategic, Rimco, and Alkeon.

This fresh infusion of funds arrives at a crucial juncture for ShareChat, which had been seeking to raise $50 million in a down round, valuing the firm at $1.5 billion. This comes after ShareChat was valued at $5 billion during its last funding round in June 2022.

funding round representation image

Despite previous successes in fundraising, ShareChat has faced challenges in attracting new investors and retaining existing backers. The company has implemented cost-cutting measures and underwent two rounds of layoffs in 2023, affecting 700 employees.

ShareChat’s struggle to monetize its user base, particularly those with limited purchasing power, has contributed to its financial difficulties. In the fiscal year 2023, ShareChat incurred significant expenses, spending nearly Rs 4,000 crore to generate only Rs 533 crore in revenue. This resulted in a high expense-to-revenue ratio, signaling financial strain for the unicorn.

funding image sharechat

The company’s losses surged due to write-offs associated with the acquisition of MxTakaTak, a competitor of its Moj app, backed by Times Internet. ShareChat invested heavily, approximately $700 million in cash and stock, to acquire MxTakaTak, impacting its financial performance.

Despite facing new challenges, ShareChat continues to dominate the market, especially following the ban on Chinese-origin apps like Helo. Its short video app, Moj, competes with platforms like Dailyhunt’s Josh, YouTube Shorts, and Instagram.

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