Microblogging site Twitter is leading a $100 million financing round in Indian language social networking app ShareChat, its first such investment globally, two people familiar with the matter said.The homegrown app, which has been fighting a bruising battle with China’s ByteDance for market share and user engagement, is expected to be valued at $600-650 million in the new round, sources indicated. Twitter is learnt to be pumping in more than $50 million with the rest of the capital coming in from Share-Chat’s existing backers like Xiaomi, Shunwei Capital, Morningside Ventures. Another likely new investor which may come on board as part of the latest funding is Hong Kongbased HillHouse Capital, another person in the know said.
Twitter’s co-founder Jack Dorsey has been directly involved in the deal as the microblogging site looks to make inroads into what’s commonly referred to as India 2 —cities which go beyond the metros.
The San Francisco-based technology major’s interest in Share-Chat comes after the Indian startup had been engaged in prolonged funding discussions with China’s internet giant Tencent. Sources close to the matter said talks with Tencent had fallen through for the second time around in a span of a year.
In all, ShareChat has raised around $120 million in risk capital.“Twitter never makes a minority investment of this kind, it is usually an acquisition. This is very significant for ShareChat looking at how the Chinese players especially ByteDance have been able to wean away users onto their platform,” said an investor tracking the segment. The homegrown startup founder in 2015x emerged as one of among the new crop of regional language content players which was tapping the next 100 million internet users buoyed by the cheap data availability made possible with the launch of Reliance Jio. However in the last year, it has faced immense pressure because of ByteDance’s aggressive moves in India. “ShareChat had been looking to bring in a large strategic round to fight the deep-pocketed ByteDance,” said another investor.
When contacted by ET, Twitter declined to comment while ShareChat and Hillhouse did not respond on the financing round till press-time.
The investment is significant for both the players coming at a time when the Indian social media space is dominated by Facebook and its group entities like Instagram and Whatsapp and more recently by products from the ByteDance stable like short video app TikTok and messaging platform Helo which directly competes with Share-Chat. Facebook boasts of more than 240 million active user base in India with Instagram cornering around 65 million users, as per Statista. While Twitter’s investment is purely financial in nature, it may look to leverage ShareChat’s reach to go beyond its 30-35 million monthly active user base in India, people tracking the industry said.
Sharechat raised Rs 720 crore last year
There may be an integration on the Twitter app itself like what the company did after acquiring Periscope, the live video app, in 2015.
“Twitter as a platform is unrelatable for the next 100 million internet audience which is where Sharechat fits in with their thesis,” said an investor in the content space. As a part of the diligence process and compliance policy for Twitter, Sharechat has removed a large section of its content which was bucketed under the “18 year-old and above” last month, one person directly aware of the transaction said.
MONETISATION ON THE CARDS FOR SHARECHAT
The company founded by Ankush Sachdeva, Bhanu Singh, Farid Ahsan is expected to step up its monetisation plan post the new funding round, another person privy to the company’s strategy said. Aside of advertising, ShareChat may also look at ways to facilitate commerce on its platform.
“ There are many businesses which are targeted at the non-metro audience which is apt for the ShareChat user base, this is where the monetisation potential is going to pushed by the company,” said a person cited earlier in the story.
Mohalla Tech, which owns ShareChat, reported no revenues for financial year ending March 31, 2018. Its income from other sources stood at ₹1.7 crore on a loss of ₹34 crore, regulatory filings show. In September last year, Sharechat raised ₹720 crore at a valuation of ₹3,489 crore, regulatory filings show.
