MUMBAI/BENGALURU: Twitter is likely leading a $100 million (?692 crore) financing round in local language social networking app ShareChat, in what could be the microblogging site’s first investment to pick up a minority stake in an Indian startup, two people familiar with the matter said.
This round is expected to value ShareChat at $600-650 million, and give it funds to take on China’s ByteDance which is growing its India market share and user engagement rapidly. The investment could help Twitter leverage ShareChat’s reach in India to make inroads into cities beyond the metros, industry trackers said.
Twitter is learnt to be pumping in more than $50 million, with the rest of the money coming in from ShareChat’s existing backers such as Xiaomi, Shunwei Capital and Morningside Venture Capital, one of the people said.
Hillhouse may Also Come on Board
Another likely new investor is Hong Kongbased investment management firm Hillhouse Capital. Twitter declined to comment on the matter, while ShareChat and Hillhouse didn’t respond to emails seeking comment until press time Thursday. Twitter’s cofounder, Jack Dorsey, has been directly involved in the process, the people said.
The San Francisco-based firm’s interest in ShareChat comes after the Indian startup’s discussions with Chinese Internet group Tencent to raise funds fell through twice in a span of around one year. So far, ShareChat has raised around $120 million from investors.
“Twitter never makes a minority investment of this kind; it is usually an acquisition,” said an investor tracking the segment. “This is very significant for Share-Chat, looking at how Chinese players, especially ByteDance, have been able to wean away users onto their platforms.”
ShareChat, founded in 2015 by Ankush Sachdeva, Bhanu Singh and Farid Ahsan, is among a new crop of regional-language content players tapping the next 100 million Internet users in India, buoyed by the availability cheap data made possible with the launch of Reliance Jio Infocomm.
However, in the past 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 a person who has invested in the sector.
The Indian social media space is dominated by Facebook, its group entities Instagram and WhatsApp and, more recently, by products from the ByteDance stable like short video app TikTok and messaging platform Helo — ShareChat competes directly with Helo. Facebook boasts of more than 240 million active users in India, while Instagram has around 65 million users, as per industry tracking firm Statista.
While Twitter’s likely investment will be 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. There could be an integration of the ShareChat app on the Twitter app itself, like what the company did after acquiring live video app Periscope 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 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” category last month, one person directly aware of the transaction said.
Monetisation for Sharechat
ShareChat is expected to step up its monetisation plan after the new funding round, a person privy to the company’s plans 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 be pushed by the company,” the person said.
Mohalla Tech, which owns ShareChat, reported no revenue for the financial year ended March 31, 2018. The company’s income from other sources was Rs 1.7 crore, even as it reported a loss of Rs 34 crore, regulatory filings show. In September last year, Share-Chat raised Rs 720 crore at a valuation of Rs 3,489 crore, its filings show.