Bengaluru-based Indian social network company ShareChat is in talks with Chinese tech giant Tencent to raise $200 million. It has been recommended that the raising would be done through optionally convertible debentures.
Due to the stiff foreign policy in India that was adopted last year to curb investments from china, the funding will be routed via a Europe-based entity. Last year due to stiff border standoff, the government had brought in binding investment laws to restrict all the investments from the countries sharing border with India. This step had effectively countered China’s increasing investment in industries in India.
ShareChat, is a regional language video and picture sharing app, that is Bengaluru-based social media startup, run by Mohalla Tech Pvt. Ltd. It had been reported that sharechat in recent years had been struggling to grow. It was also reported that the Chinese media giant Byte dance had launched ShareChat clone Helo and short video app TikTok in India last year giving a stiff competition to ShareChat which led to its falling profits. It is the reason ShareChat now actively looks to raise funds.
If ShareChat is successful in raising funds, Sharechat will get the required firepower to take on Byte Dance, the world’s most valuable startup.
In 2020 the company was reportedly also in talks to raise over $200 million from American tech giants Google and Snap at a valuation of more than $1 billion. Both ShareChat and Google had signed a non-binding proposal and had appointed investment bankers to take the talks forward.
Additionally last year, ShareChat had raised its valuation to nearly $700 million by raising about $264 million.
Sources said that “ShareChat is looking for strategic investors with social media expertise”.
Reportedly, not only ShareChat but also the Shunwei Capital-backed company would benefit from an investment by Tencent.
Tencent’s strategic expertise and deep pockets will immensely help ShareChat counter Helo, TikTok and other Chinese rivals.
It was reported that the company’s net loss had widened to Rs 676.85 crore from Rs 555.81 crore. The company’s total expenses for the fiscal year were Rs 714.97 crore as against Rs 581.45 crore. Thus the financial investment can entail a change in management of shareChat.
Last year in a pursuit to protect data privacy of Indians, Indian authorities had banned 59 Chinese apps including Tik Tok. This move had largely helped sharechat in shoring up its revenues and registering profits.