ShareChat, the short-video platform, is reportedly in the process of seeking fresh investments that would value the company at $2.2 billion. This valuation represents a significant drop of 55% compared to the valuation the company secured in the previous year. Two individuals familiar with the matter revealed that the company is exploring a bridge round of financing in the range of $40-50 million in primary capital.
However, a third source, close to the company's founder, suggested that the investment could take the form of a growth equity round. This strategic shift is attributed to ShareChat's progress towards achieving profitability. The company has managed to reduce its monthly cash burn from $45 million in 2022 to approximately $5 million presently. Furthermore, the company has effectively slashed its marketing costs by an impressive 98%. These financial improvements have brought ShareChat's revenues closer to covering its operational expenses.
It's worth noting that ShareChat had faced several challenges in recent times. In January, the company announced a significant round of layoffs, affecting nearly 20% of its workforce. Additionally, ShareChat took measures to streamline its operations by shuttering its gaming division in the previous year. It also scaled down its social-commerce and live-commerce verticals in an effort to control expenditure.
Despite these challenges, ShareChat has managed to maintain an annualized revenue run rate of around $120 million. This indicates a degree of resilience and adaptability within the company, which could be appealing to potential investors.
The sharp drop in ShareChat's valuation from the previous year raises questions about the factors contributing to this decline. It may be attributed to the competitive landscape in the social media and short-video space, which has seen evolving trends and increased competition from other platforms. Additionally, the company's cost-cutting measures and shift towards profitability may have impacted its perceived growth potential. Mint Reported
ShareChat's quest for fresh investments at a reduced valuation of $2.2 billion highlights the dynamic nature of the social media industry. While the company has faced challenges and implemented cost-cutting measures, it continues to show promise with its improved financial performance. Investors will closely watch how ShareChat utilizes the new funds to further its growth and competitiveness in the ever-evolving social media landscape.
