ShareChat needs a money plant to fight mighty ByteDance: How and Why?

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The battle for dominating regional content space has been difficult as well as expensive ever since Bytedance made a foray with a slew of apps including TikTok (formerly Musically) and Helo in India. Till early 2018, local startups like Clip App (video) and ShareChat (social networking) were blossoming.

However, things changed for them in a matter of few months as TikTok began spreading in tier II, III and IV cities along with rural India like wildfire. Parallely, to counter ShareChat, ByteDance cloned the former’s model and launched Helo in early 2018.

Hailed as YouTube killer and Instagram for Indians, TikTok eroded the market share of Clip App. Struggling to retain acquired users and match marketing budgets of $75 billion valued Chinese group, Clip App finally struck an acquihire deal with ShareChat.

Inc42 reported that it was an all-cash acquisition while multiple sources emphasised that the deal is a pure-play acquihire and still in making. Ankush Sachdeva, co-founder, and CEO, ShareChat declined to comment when Entrackr reached out to him for the confirmation.

Meanwhile, ShareChat has been witnessing intense competition from Helo which continues to burn anywhere between $15-18 million every month over the past six months. Backed with an aggressive approach, Helo has been gaining market share quickly while ShareChat userbase is witnessing its daily active users plateau over the last quarter of 2018.

According to Sensortower data, Helo had 10 million downloads in the last month. On the other hand, ShareChat numbers of install stood at 7 million. A Mint report revealed that ShareChat growth rate was over 20 per cent on a monthly basis before the arrival of TikTok and Helo. It slipped to about 6 per cent after the duo’s entry.

The data show that Bytedance’s Helo has been eating up ShareChat’s market at a rather fast pace. The Lightspeed-backed company requires to catch up with Helo on several fronts – product, distribution etc. Most importantly, it has to keep raising hundreds of million USD to fight global sensation – Bytedance.

A Mint report today reflected that ShareChat has been in talks with Tencent to rake in about $200 million with the help of the Chinese MNC and others. The deal if materalises would value ShareChat in the range of $600-700 million.

The interest of Tencent is very crucial for the Ankush Sachdeva-led firm. Besides capital, the Chineses behemoths that invested in over 700 companies would bring the deep experience of social network and a better understanding of tackling Bytedance and its subsidiary in India.

“Everyone in vernacular content space in India is raising capital. And you are competing with Bytedance, a continuous inflow of funds anyway becomes necessary”, said one of the startup’s founders on condition of anonymity.

According to him, every single venture capitalist that Clip App had approached said straight no to it. Clip App also had bluechip backers like Matrix and Shunwei but they refused to put in more capital as they observed that there is no point in fighting TikTok.

“Fighting Bytedance in content is almost like fighting Amazon in e-commerce space. ShareChat would not only require to corner the deep-pocketed Tencent but also in future would need more investors to join its fight against Helo,” pointed out Satish Meena, Forecast Analyst, Forrester India.

Meena seems to be right in his analogy to a large extent.

After e-commerce, digital payments, and food delivery; vernacular content space has turned out to be a battleground between multiple Chinese companies and Indian peers including ShareChat and DailyHunt.

If Tencent takes on the responsibility to become the money plant for ShareChat in its fight against ByteDance’s Helo, both might stay in the game for a long run like Swiggy and Zomato. Still, in case there is no progress towards profitability, it is all big money down the drain.

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