Google and Temasek-backed social media unicorn Sharechat is closing a $16 million fundraise, while firing about 5 percent of its workforce (around 30-40 employees) after a bi-annual performance review, according to sources.
The fundraise is an extension of its convertible debt round in which it has already raised $49 million from Tencent and existing investors such as Lightspeed. The additional $16 million has been committed by a Singaporean fund, said sources.
A company spokesperson said "We have launched our mid year performance cycle and as a usual practice, some employees are impacted on the basis of performance. This accounts for less than 5% of our workforce. We have a number of open positions and we continue looking for high quality talent across functions".
This comes amid a broader tightening of fresh funding to technology startups and a few weeks after Koo, a social media startup backed by the likes of Accel and popular Silicon Valley investor Naval Ravikant, shut down.
Over the past year and a half, Sharechat has fired about 850 people in successive rounds of cost cutting. Moneycontrol reported in early 2023 that two of the company’s co-founders had quit amid a broader hollowing out of its senior management cadre. Later, the co-founder duo raised $3 million in funding for their robotics startup.
At present, the company is helmed by co-founder and chief executive officer Ankush Sachdeva.
According to sources, the latest exit in Sharechat’s top leadership is that of Gaurav Bhatia, a senior vice president of engineering who had joined the company in 2021.
“Bhatia left when Sharechat called its employees back to the office (in Bengaluru). He had been based in Delhi until then,” said a person close to the developments.
A string of Indian social media and short video apps such as Koo, Chingari, Mitron and others, which had jumped onto the scene following a ban on Chinese apps amid a border skirmish with the neighbouring country, have found it difficult to scale up and monetise.
While global social media platforms like Facebook, Instagram and X (formerly Twitter) count India among their largest user-bases, the country lags behind in contributing a significant amount to their ARPU (average revenue per user).
“The first question for any social media platform is whether you will be able to scale up. Once that happens, investors begin to ask if there is enough monetisation opportunity. Fortunately, Sharechat by itself has proven itself on that as it is already operationally profitable, while its short video app Moj is moving in that direction,” said a person close to the developments.
Sharechat, valued at $5 billion in its last equity funding round, saw its revenue increase by 59 percent from Rs 347 crore in FY22 to Rs 553 crore in FY23. Meanwhile, its net losses shot up by 72 percent from Rs 2,989 crore in FY22 to Rs 5,144 crore in FY23 on the back of rising server rents, financing costs, foreign exchange losses, etc.
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