Decoding ShareChat’s valuation and Pre Series E round

The ban on TikTok and other short video entertainment apps linked to China has given a new lifeline to ShareChat. While the company has been struggling to find a sustainable business model in its core offering - vernacular social media - its TikTok clone Moj has given it enough reason to cheer. 

The company positioned Moj as an anchor in its recent $40 million bridge round and although it didn’t disclose the valuation at which it received the new infusion, Fintrackr’s estimates show that ShareChat has been valued a little over Rs 4,600 crore or $630 million.

ShareChat has allotted 2,290 Series D1 CCPS in a price band of Rs 9,73,236.24- Rs 10,13,787.75 per share to raise around Rs 230 crore. It has also allotted 1 equity share and 81 Series D2 CCPS to Trifecta at the same price to raise another Rs 8 crore.

Additionally, the company has allotted 650 unsecured NCDs at Rs 10 lakh each to Trifecta Debt to raise another Rs 65 crore.

Regulatory filings further show that Grand Anicut Angel Fund has been allotted 100 shares for Rs 10.13 crore. Pawan Munjal Family Trust invested Rs 1.52 crore whereas Ajay Sriram put in Rs 3.04 crore.

Rainforest Holdings led the round with an infusion of Rs 110 crore in exchange for 1,110 shares followed by Twitter with an investment of Rs 60 crore. SAIF Partners and Lightspeed invested Rs 15 crore each in the round, whereas India Quotient poured Rs 15.2 crore.

While the company said that the new financing was purely sourced from existing investors, Rainforest never invested in ShareChat before and there is no past record found about the British Island-based fund. 

ShareChat didn’t comment on valuation, but its spokesperson said that a global group of investors who have been limited partners to the company's existing investors came together and formed Rainforest, a Special Purpose Vehicle to invest in ShareChat. “Neither ShunWei- MorningSide nor their investors are involved in this round,” emphasized the spokesperson.

Post allotment, SAIF Partners commands the highest stake of 14.81% followed by Lightspeed with 14.33%. Shunwei Ventures and Twitter own 9.83% and 9.47% respectively whereas ShareChat’s co-founder Mohd Farid Ahsan commands 7.36%. Ankush Sachdeva and Bhanu Pratap Singh own a 7.35% stake each in the company they founded in 2015. 

As mentioned earlier, the company has been struggling with its core social media offering. This could be validated from the company’s financial performance in FY19 which showed ShareChat’s loss at Rs 415 crore without any operating revenue in FY19. While the company is yet to file its annual returns for FY20, it’s expected not to surprise with any remarkable improvement.