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In order to get fresh finance, ShareChat’s value will be significantly reduced.

According to two people familiar with the subject, ShareChat is in the final stages of negotiations to acquire around $50 million in additional capital, which would reduce the startup’s value to as low as $1.5 billion.

Existing supporters such as Temasek and Tencent are among the investors in advanced stages of discussions to participate in the next round, according to sources who asked to remain anonymous since the topic is confidential. According to one of the possible investors with whom the business engaged this year, ShareChat has had negotiations with numerous potential new investors this year, but many have balked at the chance owing to the firm’s lofty value aspirations compared to its present low revenue.

The parameters of the discussions, which are still continuing and may vary somewhat, presently value ShareChat at less than $1.5 billion, according to the sources, a significant reduction from the $4.9 billion valuation at which ShareChat secured funds early last year.

A round might be completed as early as the end of the year. According to Sensor Tower, ShareChat claims more than 400 million subscribers but has less than 40 million; hence, the value statistics are “grossly inaccurate.” Temasek refused to respond, citing company policy.

According to venture intelligence platform Tracxn, the loss-making Bengaluru-based business, which runs a social network and counts X, Snap, and Tiger Global among its investors, has received more than $1.4 billion so far.

ShareChat’s unsuccessful bet on the Indian short-video industry during the TikTok ban spurred a search for financing and the markdown. (Earlier this year, Eltrys exclusively revealed that X was considering acquiring ShareChat for $2 billion in late 2020 or early 2021.)

ShareChat, which launched the short-video app Moj in mid-2020, doubled down on the category by purchasing MX TakaTak, a video app from Times Internet’s portfolio, for more than $600 million; however, industry analysts say YouTube and Instagram filled the TikTok void as creators migrated to those far larger platforms.

ShareChat, which is eight years old and whose two co-founders departed early this year to begin a new firm, has been rushing to find methods to increase income while decreasing expenditures. It has tried many projects, including fantasy sports software and a live audio chat service. However, its revenue for the fiscal year ended March remained below $65 million. According to another individual familiar with the situation, it intends to decrease its personnel by another 15% to 20%, or 200–300 workers, in the coming weeks. This would be the startup’s third layoff in a year. (After this report was published, ShareChat confirmed the layoff, stating that around 200 positions would be lost.)

Many investors are writing down the value of their shares in startups throughout the world due to the prolonged economic downturn, which has also reduced the value of practically every public tech business. Prosus has reduced Byju’s worth to less than $3 billion, down from $22 billion in early 2022. Over the years, Byju’s has raised more than $5 billion in stock and debt.

Eltrys Team
Author: Eltrys Team

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