Mohalla Tech, which owns vernacular social media platforms ShareChat and Moj, has raised $49 million via convertible debentures, in a funding round led by existing investors Lightspeed, Temasek, Alkeon Capital, Moore
Strategic Ventures and HarbourVest, among others.
The fund will be used for improving its ad targeting technology and continuing the growth of consumer transactions business on ShareChat Live and Moj Live.
Co-founder and CEO Ankush Sachdeva said the company is expecting to turn a profit in the next 12 months,, while its short-form app Moj is expected to be profitable in the next two months. “We hit our first milestone of making the ShareChat product profitable in October 2023. We are now expecting the Moj product to be profitable by June ’24 and overall company being profitable in next 12 months,” he posted on LinkedIn. The company also has plans for a public listing after achieving its profit targets.
In December, ShareChat undertook a strategic restructuring to reduce costs and laid off about 200 employees across verticals, which was roughly 15% of its total headcount. This followed a 20% headcount reduction in January last year, when 500 employees were fired, across ShareChat and Moj. In December 2022, it had fired another 100 employees after it had shut down its fantasy gaming app Jeet 11.
These cost reduction methods were employed after the company posted a 38% jump in losses to Rs 4,000 crore in FY23, even though its revenue grew 62% year on year to Rs 540 crore. The company has been investing heavily in the last two years to boost its user numbers, but now it is shifting its focus to growing sustainably.
ShareChat’s parent had raised more than $1.1 billion during the funding boom of 2021, as per Tracxn data. Last year, it had raised $300 million in fresh funding from Times Group, Google and Temasek Holdings at a $5-billion valuation. Media reports suggest that the company took a significant valuation cut in its latest round, which brought its valuation to below $2 billion.
The company is also setting aside an ESOP pool equal to 3.5% of the cap table to be disbursed as bonus grants among employees, it said.