A month after India banned ByteDance-owned TikTok, the most popular short video app in the country, along with 58 other apps in June, homegrown social media platform ShareChat saw an increasing interest from Silicon Valley.
According to local media reports, the Bengaluru-based startup is in talks with Microsoft and Google to raise a fresh round of funding. ShareChat is reportedly looking to raise USD 150-200 million to expand its platform as it attempts to make its month-old short video app Moj the next TikTok, a goal which dozens of other Indian short video apps are eyeing.
ShareChat is also in discussions with its existing investors SAIF Partners, Lightspeed Venture Partners, and Twitter to raise USD 200 million. To date, it has raised a total of USD 223 million.
The fact that ShareChat already has Twitter on its cap table, definitely adds to the value and credibility the startup holds in the eyes of global institutional tech investors. The American micro-blogging giant had led a USD 100 million Series D round in the Indian startup a year ago.
In 2015, ShareChat started as a content sharing platform from where users could post local content on WhatsApp. After three different pivots and numerous iterations, co-founders Ankush Sachdeva, Bhanu Singh, and Farid Ahsan 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. It is available in 15 local languages but does not have English as an option. This essentially means the company is specifically targeting content creators and content consumers in tier 2, 3, and 4 cities.
Within three years of its operations, the news of its popularity reached China. To ensure it doesn’t lose the market share in India, ByteDance rolled out Helo, a replica of ShareChat in June 2018. Later that year, ShareChat took ByteDance to court for copying the product design–its features, appearance, and overall look and feel, and said Helo copied its adwords on Google so that when users search for ShareChat, Helo appears first. The Indian court barred Helo from using ‘Share’, ‘Chat’, and ‘ShareChat’ as keywords on Google’s AdWords platform. It also had to change its design in November that year, complying with the court orders.
At a time when ShareChat was losing its market share to ByteDance’s two platforms, the latter half of 2020 turned out to be on its side. When the ban on TikTok and Helo was announced, ShareChat realized this is the moment it had been waiting for and within two days it launched Moj, its own version of TikTok. The rush to quickly fill the gap left open by TikTok was so high that its initial version didn’t even have an option to create and upload videos. As it garnered users who were addicted to just watch short-videos, it eventually added video creating and uploading tools.
The value proposition of both platforms is different. ShareChat is trying to tap into the mass user base that wants to read, create, and share motivational quotes, posters, or GIFs related to daily greetings, religious photos, jokes, and sports clippings, among others. The platform makes it easy for users to create and share such content—not just on the app but on WhatsApp, which remains the largest platform to consume such media.
On the other hand, Moj is strictly for users who are looking for 15 seconds of fame by creating short-videos—a category that TikTok created. It wants to tap into the creators’ community through this new app. However, 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 the metro and tier 1 cities.
While a dozen Indian short-video apps that have popped up after TikTok’s exit, ShareChat has the advantage of operating in the space of social entertainment for some time and a significant user base. It hopes, it will give it an edge over other players in the short-video market.
According to the company, ShareChat and Moj, both have seen phenomenal growth over the past couple of months. The monthly active users (MAU) for ShareChat stand at 130 million, while Moj has over 50 million MAUs.
With Helo banned and smaller rival Samosa Labs having silently shut shop, ShareChat at present doesn’t have any prominent competitor, which makes it the category leader by default. And now that it has added Moj to its kitty, the proposition the company is offering has surely become tempting.
“The ban on TikTok India has opened flood gates,” Sanjeev Kumar, forecast analyst at Forrester, told KrASIA. “Short- videos was a segment where companies like Google and Facebook were sort of delayed. With strong content and virtually little competition from other established western players, TikTok had a free run for a while.”
“Nobody had thought short video apps will pick up as it did in India,” said Kumar. “TikTok made the inroads into tier 2 and 3 cities highlighting that no market is unreachable if you have the right content.”
“A lot of content was created and consumed from tier 2 and 3 cities on TikTok. Now with its sudden ban, its 200 million users had nowhere to go, and that created a huge void in the market,” he added.
With its short video app Moj, ShareChat has an opportunity to augment its existing offerings and create a synergy effect, Kumar believes.
What particularly attracts high-profile investors to ShareChat is its entrenched presence in tier 2, 3, and 4 cities.
“Most of the users in bigger cities are already exposed to some form of digital advertisements,” said Kumar. “The opportunity lies in tier 2 and 3 cities, where a lot of new digital advertising spend is going to go.”
According to him, USD 4.7 billion Indian digital advertising industry is at a nascent stage when compared to markets like the US, where the segment is 25 times bigger than India’s.
“The investment (from big tech companies) should be viewed as a way of acquiring users and improving the app to create an intelligent and entertaining AI-enabled interface that feeds content to users,” Kumar added.
According to Karan Mohla, Partner at early-to-growth stage VC firm Chiratae Ventures, it is not easy to build and engage users through a D2C platform in India.
“Over a period of time, ShareChat has solved a hard problem. Once you build a distribution channel and it becomes a part of users’ everyday life, then it is much easier to launch different products and services for the same set of users,” he said. “Using the same distribution channel, one can build an ecosystem around it.”
He believes it is ShareChat’s access to a huge customer base and the ability to create an ecosystem (of services) that makes a company an attractive proposition for investors.