Mohalla Tech, the parent entity of the vernacular social media platform ShareChat and short video entertainment app Moj, has raised around $49 million in debt from existing investors.
The company has passed a board resolution to issue 4,895 Series I debentures at an issue price of $10000 each to raise $49 million, regulatory filing with RoC shows.
Existing investors including Temasek, Lightspeed, HarbourVest, Moore Strategic, Rimco and Alkeon invested in the debt round.
In a move to retain and reward its employees, ShareChat has also announced bonus ESOP grants that will double ESOP holdings of all its current employees.
Inc42 reported the development first.
The fresh funding comes at a time when ShareChat was looking to raise $50 million in a down round to the tune of $1.5 billion. The firm was valued at $5 billion during its last fundraise in June 2022.
According to startup data intelligence platform TheKredible, ShareChat has raised around $1.8 billion from investors including Twitter (now X), Alkeon Capital, Moore Strategic Ventures, and Tencent, among others.
ShareChat has been eyeing a large equity round but the company is finding it difficult to rope in new and existing backers. It also put several cost-cutting measures and laid off 700 employees across two phases in 2023. The company’s struggle is largely driven by its inability to monetise from the user base which has low-purchasing power.
Even after nine-year of its operations, ShareChat had to spend nearly Rs 4,000 crore in FY23 to earn Rs 533 crore in revenue. On a unit level, it spent Rs 7.16 to earn a rupee of operating revenue in the last fiscal. This is one of the highest expense-to-revenue ratios for a unicorn in FY23.
The surge in losses was primarily due to the write-off undertaken by the company for the acquisition of Moj’s competitor MxTakaTak. The company spent heavily ($700 million via cash and stock) to acquire the Times Internet-backed company.
While ShareChat has almost no competition after the blanket ban on China-origin apps like Bytedance-owned Helo, its short video app Moj competes with Dailyhunt’s Josh, YouTube Shorts and Instagram.
Update: The headline and story have been updated to include additional information from ShareChat’s press release.
