Google-backed ShareChat raised $49 M Debt funding from current investors

The company that owns Mohalla Tech, which is behind the short video entertainment app Moj and the vernacular social media platform ShareChat, has raised about $49 million in debt from current investors.

In order to raise $49 million, the company’s board resolved to issue 4,895 Series I debentures at an issue price of $10,000 each, according to a regulatory filing with the Reserve Bank of Canada.

Temasek, Lightspeed, HarbourVest, Moore Strategic, Rimco, and Alkeon were among the previous investors who contributed to the debt round.

At the time of the new funding, ShareChat was hoping to raise $1.5 billion, or $50 million, in a down round. After its most recent fundraising effort in June 2022, the company was valued at $5 billion.

ShareChat reportedly raised about $1.8 billion from investors, including Tencent, Alkeon Capital, Moore Strategic Ventures, and Twitter (now X).

Though the company is having trouble attracting both new and old investors, ShareChat has been eyeing a sizable equity round. In 2023, it implemented multiple cost-cutting measures and laid off 700 workers in two stages. The main cause of the company’s difficulties is that its user base has little purchasing power and thus presents a challenge for it to monetize.

ShareChat had to spend almost Rs 4,000 crore in FY23 in order to generate Rs 533 crore in revenue, despite operating for nine years. In the previous fiscal year, the unit cost was Rs 7.16 for every rupee of operating revenue. In FY23, this unicorn has one of the highest expense-to-revenue ratios.

The write-off made by the business for the purchase of MxTakaTak, a rival company to Moj, was the main cause of the spike in losses. The acquisition of the Times Internet-backed company came at a high cost to the company ($700 million in cash and stock).

ShareChat’s short video app Moj competes with Dailyhunt’s Josh, YouTube Shorts, and Instagram; however, it has virtually no competition following the general ban on China-origin apps, such as Bytedance-owned Helo.