Exclusive: Social networking platform ShareChat raises $100 mn

Bengaluru-headquartered Mohalla Tech Pvt. Ltd, which operates vernacular social networking platform ShareChat, has raised Rs 720.29 crore ($99.23 million at current rates) in a new funding round led by existing investor Shunwei Capital, two people in the know told TechCircle on condition of anonymity.

The company will use the capital to develop its core product offering as it looks to diversify into other categories, one of the persons mentioned above said.

While Shunwei put in Rs 236.54 crore ($32.5 million), Hong Kong-based Morningside Ventures invested Rs 180.72 crore ($25 million), accounting for the second largest contribution, the company's filings with the Registrar of Companies show.

Existing investors Xiaomi ($16.83 million), Lightspeed Partners ($15.2 million), SAIF Partners, Venture Highway and an unidentified Cayman Islands-based fund accounted for the remaining capital, the filings revealed.

With the current round, the total capital raised by ShareChat to date stands at $124 million.

According to back-of-the-envelope estimates by TechCircle, ShareChat raised this round at an estimated post-money valuation of about Rs 3,332.14 crore ($458.49 million). This indicates a seven-fold rise in valuation from its previous funding round.

ShareChat last raised Rs 116.31 crore ($18.2 million then) in a Series B funding round led by Chinese smartphone manufacturer Xiaomi at a post-money valuation of Rs 431 crore ($67 million).

A spokesperson from ShareChat declined to comment. E-mail queries sent to Shunwei Capital, Morningside Ventures, Xiaomi, Lightspeed, SAIF Partners and Venture Highway did not immediately elicit a response at the time of publishing this report.

In November 2016, the company had raised $4 million (Rs 27.5 crore) in a Series A round led by Lightspeed India Partners. Other participants included existing investors SAIF Partners and India Quotient, as well as Delhi-headquartered early-stage venture capital firm Venture Highway.

In October 2015, it had raised $1.35 million from SAIF Partners and India Quotient. 

The firm was also one among several startups selected by Google for its accelerator programme, where it received $50,000 in equity-free seed funding.

ShareChat

Founded in 2015 by Farid Ahsan, Bhanu Pratap Singh and Ankush Sachdeva, the social networking platform allows users to create, discover and share content such as videos, jokes, songs and images.

The Android app, which has more than 10 million downloads on the Google Play Store, is available in multiple Indian languages—Hindi, Telugu, Marathi, Gujarati, Punjabi, Malayalam, Bengali, Tamil, Kannada and Odia.

ShareChat had recorded a 14-fold rise in gross revenues at Rs 78.40 lakh for the financial year 2016-17, up from Rs 5.56 lakh in the previous year.

The company recorded zero operational revenues for the last two financial years. The entire revenue generated by the company was from Other Income, which included profit on sale from investments (Rs 41.69 lakh), interest income (Rs 2.57 lakh) and participation income (Rs 34.12 lakh).

Gross expenditure rose four-fold to Rs 10.38 crore in 2016-17 from Rs 2.62 crore the previous year, mainly because employee-related expenses and administrative overheads nearly tripled. Consequently, net losses also rose nearly four-fold to Rs 9.59 crore in 2016-17 from Rs 2.56 crore the previous year.

Deals in the space

This is not Shunwei’s first bet in a vernacular content social networking platform in India. 

In August this year, it invested $5 million (Rs 35 crore) in medical content startup myUpchar as part of a Series A round, along with investment firms Nexus Venture Partners and Omidyar Network. myUpchar provides medical and wellness content in Hindi and other Indian languages.

In July this year, Shunwei led a $5-million Series A round into Bombinate Technologies Pvt. Ltd, which runs vernacular knowledge-sharing platform Vokal.

A number of other startups offering content in Indian languages have garnered investor interest in the past.

In May this year, NewsDog, a Hindi and vernacular app founded by Chinese entrepreneurs, raised $50 million (Rs 340 crore) in a Series C round led by Chinese internet giant Tencent Holdings. Other investors who put in money were California-based venture capital firm DHVC, Chinese VC company Legend Capital and Hong Kong-based app developer Dotc United Group.

In December 2017, it invested in Bengaluru-based Transversal Tech Pvt. Ltd, which operates video sharing app Clip that offers vernacular content.

In 2016, Hindi social networking platform ShabdaNagari.in, which is operated by Kanpur-based Trident Analytical Solutions Pvt. Ltd, raised an undisclosed amount in bridge funding from ah! Ventures.