Indian social media startup ShareChat, which also runs short video app Moj, has landed a half-a-billion dollar check from New York-headquartered hedge fund Tiger Global, American social media giant Snap, and Twitter, among others.
The USD 502 million funding round has pushed ShareChat’s valuation to USD 2.1 billion from reportedly USD 650 million last September when it raised USD 40 million in a pre-Series E round. With this, ShareChat becomes the tenth startup to become a unicorn, a startup with USD 1 billion valuation.
This is Tiger Global’s third investment this week, the other two being a USD 200 million lead round in credit card payment company Cred and USD 83 million in wealth tech startup Groww, which landed both the Bengaluru-based startups into the elite unicorn club. This year, Tiger Global has quickened its pace of investments in the Indian startup ecosystem, which is seeing a steep spike in capital inflow from global VCs this year.
According to Venture Intelligence, in the first quarter of 2021, homegrown startups have raised USD 4.2 billion in venture capital, 40% higher than the corresponding period last year. The trend of late-stage investment, which marked the January-March quarter, has continued in this quarter as well.
It is interesting to note that Snap, which launched its short video app Spotlight in India last month, has joined the cap table of its larger rival. The development comes amidst the intensifying competition in the short video segment, which has seen over a dozen homegrown and global players like Mitron, Chingari, Trell, Roposo, Josh, and Reels come up since the Chinese short video app TikTok was banned by India last June.
ShareChat had put together Moj in 30 hours after the TikTok ban. Since then, the six-year-old company, which has 160 million monthly active users (MAU) on its main app, has emerged as one of the leading companies in short video space with Moj, amassing more than 120 million MAU.
“When we saw a large vacuum emerge on June 29 with a lot of short-video apps exiting the market—we knew this opportunity was for us,” Ankush Sachdeva, CEO and cofounder, Moj and ShareChat, wrote in a blog post on Thursday. “There were millions of short-video creators already trained for creating that content supply.
To pace up the product development for Moj, the company had been on the lookout for a new, heavy-weight backer since the second half of 2020, and has reportedly held talks with tech titans like Google, Microsoft, Snap, and Tencent.
While Google chose to invest in parent companies of its rivals Josh and Roposo late last year, Microsoft also put its weight behind the former along with Google. This left behind Snap as a potential investor, since Tencent, being a Chinese VC, still has restrictions on writing checks in Indian companies.
The journey to the top
ShareChat’s journey started when co-founders Sachdeva, Bhanu Singh, and Farid Ahsan were doing engineering and met each other in 2012 while participating in a hackathon.
“We built 14 products while being in college—and failed 14 times to get it off the ground,” Sachdeva wrote.
“But in Nov 2014 we discovered an interesting phenomenon—the interest-based WhatsApp groups in India,” he added. “We discovered that Indian users were hungry for finding content in their own language. They were sharing their phone numbers publicly on FB (Facebook) in the hope to get added to an interest-based local language group on WhatsApp.”
The trio launched the first version of ShareChat in Jan 2015, which was a content-sharing platform from where users could post local content on WhatsApp. After three different pivots and numerous iterations, they have reached the current version—a regional language platform where users can share content, consume videos, see the trending topics, and chat with other users, among other things. While it is available in 15 local languages it does not have an English version. This essentially means the company is specifically targeting content creators and consumers in India’s lower-tier cities.
However, with Moj, it doesn’t want to limit its usage to smaller towns. Other than 15 local languages to choose from, Moj also has English as an option for users in metro and tier 1 cities.
According to Sachdeva, content consumption on ShareChat and Moj is driven through an AI (artificial intelligence)-powered content feed.
Two months after raising the fresh capital in September last year, ShareChat set up a research and development facility in Silicon Valley to build AI-based products and solutions for ShareChat and Moj including deep learning, camera technology, and recommendation engine.
“It is slow and inefficient to ask our users to follow accounts before we can serve them a good feed,” he said. He added that another important application area of AI lies in the automated understanding of semantics and the quality of content.
“We have seen over years how the quality and speed of personalization is so highly correlated with the user’s long-term retention and therefore our focus on the AI-first approach in Moj has led to us having 50% higher retention and 2x the DAU (daily active users) compared to our closest competitor.”
The company has hired five directors of AI in both the US and the UK in the past six months and doubled its workforce in the second half of 2020, including 50 AI engineers, said a recent report by Financial Times.
ShareChat is now aiming for a cumulative 1 billion MAUs on its platform with increasing internet penetration.