ShareChat Secures $16 Mn In Debt Financing, Fires Nearly 5% Workforce

According to media reports, vernacular social media platform ShareChat has raised additional USD 16 million in debt financing through convertible debentures. 

This increase brings the total size of its previous debt round to USD 65 million. The latest funding was provided by EDBI, a Singapore-based fund that also invests in home design and renovation platform Livspace.

As per media reports, the company has laid off approximately 5 per cent of its workforce, amounting to around 40 employees. These layoffs are part of a performance improvement plan (PIP) aimed at reducing costs and achieving profitability. ShareChat, which now has around 800 employees, was previously at a peak of 2,700.

Media sources indicate that a spokesperson for ShareChat commented on the layoffs, stating that this layoff accounts for less than 5 per cent of our workforce. We have a number of open positions and continue looking for high-quality talent across functions."

In April, ShareChat raised USD 49 million in convertible debentures from existing investors, including Lightspeed, Temasek, Alkeon Capital, Moore Strategic Ventures, and HarbourVest. This round significantly reduced the company's valuation by over 60 per cent, dropping it below USD 2 billion from its peak valuation of USD 5 billion in 2022.

As per media reports, convertible debentures allow companies to raise funds while setting a future price range for subsequent investments. Over the past year, Mohalla Tech, the parent company of ShareChat and short video platform Moj, has been striving to cut operating costs amid a tightening funding environment and stiff competition from global rivals like Instagram and YouTube.

According to media reports, the additional funds will be used to invest further in ShareChat's advertising technology and expand its consumer transactions business by developing new monetisation features for its creator ecosystem. The company claims that ShareChat has been operationally profitable for several months, while the Moj app is nearing break-even.